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First Punjab Modaraba

Third Quarterly Report 2015 Page 1

Corporate Profile 2

Directors’ Report 3

Condensed Interim Balance Sheet 4

Condensed Interim Profit and Loss Account 5

Condensed Interim Statement of Comprehensive Income 6

Condensed Interim Cash Flow Statement 7

Condensed Interim Statement of Changes in Equity 8

Selected Notes to the Interim Financial Information 9-14

Contents



Corporate Profile

Board of Directors

Punjab Modaraba Services (Pvt.) Ltd.

Khalid Siddiq Tirmizey Chairman

Aamir Malik Chief Executive

Khawaja Farooq Saeed Director

Nadeem Amir Director

Tariq Maqbool Director

Mahboob-ul-Hassan Director

Chief Financial Officer & Company Secretary

Mudassar Kaiser Pal

Audit Committee

Khawaja Farooq Saeed Chairman

Nadeem Amir Member

Mahboob-ul-Hassan Member

Human Resource Committee

Mahboob-ul-Hassan Chairman

Nadeem Amir Member

Aamir Malik Member

Auditors of the Modaraba

Ernst & Young Ford Rhodes Sidat Hyder

Chartered Accountants

Auditors of the Management Company

Hameed Chaudhry & Co.

Chartered Accountants

Bankers

The Bank of Punjab

Bank Alfalah Limited

Registrar

Hameed Majeed Associates (Pvt) Ltd.

H.M. House, 7-Bank Square,

The Mall,Lahore

Tel:(+92-42) 37235081-2

Registered Office

BOP Tower, 1st Floor, 10-B Block E-II, Main

Boulevard, Gulberg III, Lahore. Postal Code No.

54600

PABX: (+92-42) 35783676

Fax: (+92-42) 35784068

E-mail: [email protected]

URL: www.punjabmodaraba.com.pk



Directors’ Report

The Board of Directors of Punjab Modaraba Services (Pvt.) Limited, the Management Company of First Punjab Modaraba (the Modaraba), is pleased to present the nine months results of the Modaraba, together with Directors’ report, for nine months ended March 31, 2015.

Although the structural reform process remained a challenge for the government the decline in the international oil prices certainly had a salutary effect on domestic inflation, on the current account deficit and on reserves. Rising remittances proved yet another blessing for the domestic economy and no doubt accounts for better macroeconomic statistics than would otherwise have been possible. One can hope for consistent improvement in coming times on basis of government’s resolution to overcome economic challenges. By the grace of Almighty Allah, the profitable run of the Modaraba continued for sixth consecutive quarter. On accumulated basis for nine months an increase of 31% was witnessed in revenues on account of recoveries in major non performing assets (NPAs). On the other hand, strict control over expenditure resulted in decrease of 21% in operating cost. Resultantly, operating profit of Rs.134.832 million was booked against Rs.10.780 million in the corresponding period. The net charge of provisions and adjustment of deferred tax of Rs.26.400 million resulted in net profit of Rs.108.431 million, being 317% more than the profit in corresponding period.

The continuous quarterly profitability has brought the much required financial stability to the Modaraba in shape of improved equity and other fundamentals and has set the course of operating viability thereby removing doubts on its ability to continue as a going concern.

Going forward, business development and recovery from NPAs will remain the focus alongside due emphasis on business expansion and diversification. Recoveries from NPAs will be made through out of court settlements and restructuring / rescheduling as well as active pursuit of litigation cases. The fresh assets will be procured with cautious approach and maximum mitigation of risk. The development of new products and services, identifying new target markets and repeat business from regular customers has also been made essential part of business plan.

The Board duly acknowledges performance of the management and the continuous guidance and support of the Securities & Exchange Commission of Pakistan which is further expected in the coming years.

For and on behalf of the Board of Directors

Lahore: April 23, 2015

Chief ExecutivePunjab Modaraba Services

( Private ) Limited




( Private ) Limited

DirectorPunjab Modaraba Services

( Private ) Limited


( Private ) Limited

Condensed Interim Balance SheetAs at 31 March 2015

Note Un-Audited Audited 31 March 30 JuneASSETS 2015 2014 Rupees Rupees

Non current assets

Tangible fixed assets 5 Ijarah assets 250,872,393 351,329,549 Assets in own use 1,007,066 1,324,919 In-tangible assets 6 9,064,537 9,258,858 Shares-Available for sale 7 9,816,099 9,351,243 Long term musharikah investment - secured 8 40,670,756 61,425,668 Long term morabaha investment - secured 9 72,235,548 - Long term deposits 192,500 192,500 Deferred tax asset 34,637,290 25,373,531 418,496,189 458,256,268 Current assets

Short term morabaha investment - secured 9 283,032,534 378,565,903 Current maturity of long term investment 83,998,722 70,585,369 Advances, deposits, prepayments and other receivables 350,392,034 352,843,147 Cash and bank balances 13,972,282 64,165,836

731,395,572 866,160,255

TOTAL ASSETS 1,149,891,761 1,324,416,523

EQUITY AND LIABILITIES

Capital and reservesCertificate capital 340,200,000 340,200,000

Reserves (155,583,340) (247,469,394) 184,616,660 92,730,606 Non current liabilities Security deposits 92,808,608 112,132,073 Long term musharikah finance secured 10 673,718,462 896,953,577 766,527,070 1,009,085,650 Current liabilities

Current maturity of long term liabilities 64,955,130 60,410,480 Deferred morabaha income 2,729,277 4,344,028 Redeemable capital - participatory and unsecured 100,000,000 100,000,000 Trade and other payables 3,826,233 18,027,543 Mark up payable 11 12,456,166 17,674,685 Provision for taxation 1,182,741 10,020,359 Unclaimed profit 13,598,484 12,123,172 198,748,031 222,600,267 Contingencies and commitments 12 - - TOTAL EQUITY AND LIABILITIES 1,149,891,761 1,324,416,523

The annexed notes 1 to 19 form an integral part of this interim financial information.




( Private ) Limited


( Private ) Limited


( Private ) Limited

Condensed Interim Profit and Loss AccountFor the period ended 31 March 2015 (Un-Audited) 2015 2014 July to January to July to January to Note March March March March ............................................. (Rupees) .............................................Income Ijarah rentals 128,821,525 36,682,887 181,383,179 58,979,287 Profit on morabaha investment 9,877,109 5,793,328 14,260,741 2,984,428 Profit on musharikah investment 4,772,340 2,003,770 10,720,586 2,589,988 Gain on disposal of fixed assets 13 155,618,948 54,185 22,538,401 21,554,599 Other income 12,966,987 9,072,039 8,354,012 1,772,472 312,056,909 53,606,209 237,256,919 87,880,774 Expenses Operating expenses 13,966,467 4,696,697 18,626,725 5,980,181 Depreciation of ijarah assets 114,385,242 34,954,352 141,169,912 42,235,267 Financial and other charges 14 48,872,570 13,741,746 66,680,091 19,972,129 177,224,279 53,392,795 226,476,728 68,187,577 Operating profit before provision 134,832,630 213,414 10,780,191 19,693,197 (Reversal) / Provision for morabaha investment (917,762) (7,838,334) (14,507,127) (2,036,366)(Reversal) / Provision for impairment of Ijarah assets 13,861,524 (971,263) 2,286,745 1,854,245(Reversal) / Provision for musharikah investment 2,599,907 - (11,124,610) - Other provisions/(Reversal) (189,881) - - -

15,353,788 (8,809,597) (23,344,992) (182,121) Operating profit after provision and impairment 119,478,842 9,023,011 34,125,183 19,875,318 Modaraba Company’s management fee - - - - Profit for the period 119,478,842 9,023,011 34,125,183 19,875,318 Taxation 11,047,644 1,010,155 - - 108,431,198 8,012,856 34,125,183 19,875,318 Earnings per certificate - basic 3.19 0.24 1.00 0.58 The annexed notes 1 to 19 form an integral part of this interim financial information.



Condensed Interim Statement of Comprehensive IncomeFor the period ended 31 March 2015 (Un-Audited)


( Private ) Limited


( Private ) Limited


( Private ) Limited

2015 2014 July to January to July to January to March March March March ............................................. (Rupees) .............................................

Profit for the period 108,431,198 8,012,856 34,125,183 19,875,318

Other comprehensive incomefor the period: Unrealized gain on available forsale shares 464,856 - - - Total comprehensive income forthe period 108,896,054 8,012,856 34,125,183 19,875,318




Condensed Interim Cash Flow StatementFor the period ended 31 March 2015 (Un-Audited)


( Private ) Limited


( Private ) Limited


( Private ) Limited

Note 31 March 31 March 2015 2014 Rupees RupeesCash flow from Operating activities

Cash generated from operations 15 267,185,206 215,360,838

Profit paid on certificates of musharikah (5,478,613) (14,968,356)Profit paid on musharikah finances (48,457,875) (56,095,647)Taxes paid (29,149,021) (84,153)

(83,085,509) (71,148,156) Net cash generated from operating activities 184,099,697 144,212,682

Cash flow from investing activities Musharikah investment 4,741,652 (2,417,778)Cash margin on LG received/ (refunded) - (1,079,850)Purchase of fixed assets in own use (265,100) (202,140)Proceeds from sale of assets in own use - 18,772,053 Net cash generated from investing activities 4,476,552 15,072,285

Cash flow from financing activities Musharikah finances (223,235,115) (15,684,363)Redeemable capital - (201,000,000)Profit distributed among the certificate holders (15,534,688) (257)

Net cash used in financing activities (238,769,803) (216,684,620)

Net decrease in cash and cash equivalents (50,193,554) (57,399,653)

Cash and cash equivalents at the beginning of the period 64,165,836 90,519,231

Cash and cash equivalents at the end of the period 13,972,282 33,119,578




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Notes to the Condensed Interim Financial InformationFor the period ended 31 March 2015 (Un-audited)

1 Status and nature of business

First Punjab Modaraba (the Modaraba) was formed under the Modaraba Companies and

Modaraba (Floatation and Control) Ordinance, 1980 and rules framed there under and is managed by Punjab Modaraba Services (private) Limited (wholly owned subsidiary of The Bank of Punjab), a company incorporated in Pakistan. The registered office of the Modaraba is situated at 1st Floor,B0P Tower,10-B, Block-E-II, Gulberg III, Lahore. The Modaraba commenced its operations from 23 December 1992. The Modaraba is listed on all stock exchanges in Pakistan.

The Modaraba is a perpetual, multi purpose and multi dimensional modaraba and is primarily engaged in the business of Ijarah , musharikah and morabaha financing, equity investment and other related business in accordance with the injunctions of Islam. .

2 Basis of preparation

This condensed interim financial information is un-audited. This interim financial information for nine months ended 31 March 2015 has been prepared in accordance with the requirements of the International Accounting Standard (IAS) - 34 ‘Interim Financial Reporting’.

This condensed interim financial information is being submitted to the certificate holders as required under the Rule 10 of Modaraba Companies and Modaraba Rules, 1981.

3 Accounting policies

The accounting policies and methods of computation adopted for the preparation of this condensed interim financial information are the same as those applied in the preparation of the financial statements of the Modaraba for the preceding year ended 30 June 2014, except as follow

3.1 New, amended and revised standards and interpretation of IFRSs

The Modaraba has adopted the following amendments and interpretation of IFRSs which became effective for the current period:

IAS 19 - Employee Benefits - Employee Contributions (Amendment)

IAS 32 - Financial Instruments : Presentation – (Amendment)-Offsetting Financial Assets and

Financial Liabilities

IAS 36 - Impairment of Assets – (Amendment)-Recoverable Amount Disclosures for Non-Financial Assets

IAS 39 - Financial Instruments: Recognition and Measurement – (Amendment)-Novation of

Derivatives and Continuation of Hedge Accounting IFRIC 21 - Levies

The adoption of the above amendments to accounting standards and interpretations did not

have any material effect on the condensed interim financial information.



In addition to the above standards and interpretations, improvements to various accounting standards have also been issued by the IASB and are generally effective for current period . The Modaraba expects that such improvements to the standards do not have any material impact on the Modaraba’s financial statements for the period.

4 Estimates

The preparation of this condensed interim financial information requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. The significant judgements made by management in applying the Modaraba’s accounting policies and the key sources of estimation were the same as those that were applied to the financial statements for year ended 30 June 2014.

Ijarah Assets in Assets own use Total Assets Rupees Rupees

5 Tangible fixed assets

Book Value as at 30 June 2014 (Audited) 351,319,302 1,324,919 352,644,221

Additions during the period 32,347,000 265,100 32,612,100

Disposal dring the period (20,792,128) - (20,792,128)

Net Depreciation (114,385,242) (582,953) (114,968,195)

Impairment of Assets - - -

Charged (13,861,524) - (13,861,524)

Transfer 16,244,985 - 16,244,985

Book Value as at 31 March 2015 (Un-audited) 250,872,393 1,007,066 251,879,459

Note 31 March 30 June 2015 2015 (Un-audited) (Audited) Rupees Rupees6 In-tangible assets

Trading Rights Entitlement Certificate 6.1 26,648,757 26,648,757 Room at Lahore Stock Exchange 9,000,000 9,000,000 35,648,757 35,648,757 Less: Impairment against Trading Right Entitlement Certificate (26,648,757) (26,648,757)

9,000,000 9,000,000 Computer Software 64,537 258,858

9,064,537 9,258,858



6.1 This represents trading rights entitlement certificate (TREC) received against membership card pursuant to demutualization of the Lahore Stock Exchange (LSE).

6.2 As per the requirements of Stock Exchanges (Corporatisation, Demutualization and Integration) Act 2012, the Modaraba was required to either register itself as broker or transfer / sell TREC within 2 years from the date of demutulization i.e. 27 August 2014. The management plans to use the TREC for its brokerage business and had accordingly applied to LSE for registration as broker before the lapse of the said period.

The Securities and Exchange Commission of Pakistan has declined Modaraba’s application against which a review application has been filed before Securities and Exchange Commission of Pakistan.

Note 31 March 30 June 2015 2014 (Un-audited) (Audited) Rupees Rupees7 Shares available for sale Unquoted Lahore Stock Exchange Limited 7.1 9,351,243 9,351,243 Add: Surplus on revaluation of investment 464,856 -

9,816,099 9,351,243

7.1 This represent 843,975 shares of Lahore Stock Exchange Limited at Rs. 10 each with a

total face value of Rs.8,439,750. Out of total shares issued by the LSE, the Modaraba has receiced 40% equity shares i.e. 337,590 shares in its CDC account. The remaining 60% shares have been tranferred to CDC sub-Account in the Modaraba’s name under the LSE’s participant ID with the CDC which will remain blocked until these are divested/sold to strategic investor(s), general public and financial institutions and proceeds are paid to the Modaraba.

In absence of active market, these have been measured at break up value determined on the basis of financial statements of LSE for the year ended 30 June 2014.

31 March 30 June 2014 2014 (Un-audited) (Audited) Rupees Rupees8 Long term musharikah investment-secured Musharikah Investment 85,154,722 137,814,212 Less: Current portion of long term musharikah investment (35,774,440) (70,278,925) Less: Provision against musharikah investment (8,709,526) (6,109,619)

40,670,756 61,425,668



31 March 30 June 2015 2014 (Un-audited) (Audited) Rupees Rupees9 Short - term Morabaha investment-secured

Gross Morabaha Investment 599,038,593 612,839,518 Add: Unearned morabaha income 2,729,277 4,344,028

601,767,870 617,183,546 Less: Provision for doubtful finances (246,499,788) (238,617,643) Less: Transferred to long term 72,235,548 -

283,032,534 378,565,903

10 Musharikah finances - secured The Modaraba has availed musharikah finance facilities from The Bank of Punjab having approved

limits of Rs.1,060 million (2013: Rs.1,060 million). These facilities are secured by way of first pari passu charge over present and future fixed assets of Modaraba for amount of Rs. 860 million and first pari passu charge over present and future current assets of Modaraba for an amount of Rs. 1,040 million. The estimated share of profit payable on musharikah facilities is 7.5% (2014: 7.5%).

31 March 30 June 2015 2014 (Un-audited) (Audited) Rupees Rupees11 Mark-up payable

Musharikah Finance 11,869,622 17,168,673 Redeemable Capital 586,544 506,012

12,456,166 17,674,685

12 Contingencies and commitments 12.1 Contingencies There are no significant changes in contingent liabilities since the last published

financial statements.

12.2 Commitments Musharikah commitments approved but not disbursed as on balance sheet date amount

to Rs.9.31million (June 30, 2014: Rs. Nil).

13 Gain on disposal of fixed assets

This includes Rs.155,712,000 received being Modaraba’s share on sale of assets through Court.



31 March 30 June 2015 2014 (Un-audited) (Audited) Rupees Rupees

14 Finance Cost

Financial charges on Musharikah & Morabaha 43,242,435 52,352,945 Financial charges on Redeemable capital 5,630,135 14,327,146 48,872,570 66,680,091

15 Cash flow from operating activities

Profit for the period 119,478,842 34,125,183 Adjustments for:

Depreciation of ijarah assets 114,385,242 141,169,912 Depreciation of assets in own use 579,859 2,236,427 Amortization of intangible assets 197,865 197,874 Gain/loss on sale of fixed assets (155,618,948) (22,538,401) Provision/(Reversal) against doubtful morabaha investment (917,762) (14,507,127) Provision/(Reversal) against Ijarah assets 13,861,524 2,286,745 Provision/(Reversal) against musharikah investment 2,599,907 (11,124,610) Other provisions (189,881) - Profit on musharikah/morabaha finances 43,239,356 52,352,945 Profit on certificates of musharikah 5,633,214 14,327,146 23,770,376 164,400,911 Operating profit before working capital changes 143,249,218 198,526,094

Working capital changes

(Increase)/decrease in operating assets:

Morabaha investment 22,600,832 94,248,457

Purchase of ijarah assets (32,336,753) (41,245,500)

Proceeds from disposal of fixed assets 176,411,076 33,245,920

Long term deposits - -

Advances, deposits, prepayments and other

receivables (13,793,872) (35,481,124)

152,881,283 50,767,753

Increase/(decrease) in operating liabilities:

Security deposits received / (refunded) (14,778,815) (12,753,414)

Trade and other payables (14,166,480) (21,179,595)

(28,945,295) (33,933,009)

123,935,988 16,834,744

Cash generated from operations 267,185,206 215,360,838



31 March 30 June 2015 2014 (Un-audited) (Audited) Rupees Rupees

16 Transactions with related parties

16.1 Balance outstanding at the end of period

16.1.1 The Bank of Punjab (Holding company of Modaraba’s Management Company)

Musharikah finances 673,718,462 896,953,577

Profit payable on Musharikah finances 11,869,622 17,168,673

Net book value of the assets leased to employees 201,885 1,694,118

Lease security deposits 902,230 902,230

Certificates of Musharikah 100,000,000 100,000,000

Profit payable on Certificates of Musharikah 586,544 505,562

16.2 Transactions during the period 16.2.1 The Bank of Punjab (Holding company of Modaraba’s Management Company)

Ijara rentals income 933,462 1,052,190

Profit charged on finances 43,239,356 51,859,726

Profit charged on certificates of musharikah 5,630,135 14,327,146

17 Financial risk management

The Modaraba’s financial risk management objectives and policies are consistent with that

disclosed in the financial statements as at and for the year ended 30 June 2014.

18 Date of authorization

This unaudited interim financial information for the period ended 31 March 2015 was authorized

for issue by the Board of Directors of the Management Company, on April 23, 2015

19 General

Figures have been rounded off to the nearest rupee.


( Private ) Limited


( Private ) Limited


( Private ) Limited

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