This one of the oldest and large modarabas of Pakistan and belongs to a reputed financial group. At the apex of the Board of Directors, sits, chairman S. Iradat Husain who is a banker and financial professional.
During the year under review an associate modaraba, Modaraba Al-Tijarah (MAT) was merged with Modaraba Al-Mali (MAM).
The modaraba substantially increased its profitability as compared to the preceding year's, and maintained quite attractive profit distribution profile.
However, the market price of the modaraba certificates remained much below par. According to the published statistics during the last 52 weeks its certificate price ranged between Rs 5 and Rs 9.40 per share mainly because of depressed market capitalisation of the Modarabas sector.
During the current financial year, Pacra improved MAM's long term entity rating from "BBB+" to "A-" while maintaining the short-term rating at "A2".
The MAM chairman stated that realising cutthroat competition from the banks and leasing companies in the leasing business, its management focused on increasing the size and quality of its morabaha portfolio.
It also successfully started the innovative business of mobile tower renting.
A substantial gain was also earned through sale of office premises. Modaraba Al-Mali is a multipurpose, perpetual Modaraba floated on July 08, 1987 having its registered office situated at 10th floor, Progressive Square Shahrah-e-Faisal Karachi and is managed by JS Finance Ltd, one of the constituent members of Jahangir Siddiqui Group. The modaraba is engaged in the business of leasing, morabaha, musharika financing, construction and renting of mobile towers and other related business.
It is listed on Karachi, Lahore and Islamabad stock exchanges.
The financial statements for the year ended June 30, 2006, include the finacial position and the results of operations Modaraba Al-Mali and Modaraba Al-Tijarah (MAT) due to the merger of MAT with Modaraba Al-Mali. However, the merger is effective as of July 01, 2005 (after the balance sheet of the account under review).
As per scheme of arrangements a certain number of modaraba certificates of MAM of the nominal value of Rs 10 each shall be issued to the certificate holders of MAT in lieu of its certificates.
As regards its swap ratio, it is 0.022 shares of Modaraba Al-Mali for every one share held in MAT.
The assets and liabilities of MAT have been taken over by MAM at their book value as at June 30, 2005. Accordingly the net assets of Modaraba Al-Tijarah at Rs 2.18 million has to be adjusted by issuance of certain number of certificates of MAM plus certificates premium account of MAM.
Due to the merger, Modaraba Al-Tijarah was to be dissolved without winding up on the date which Modaraba Al-Mali allotted and issued its certificates to the members of MAT.
These certificates were issued subsequent to the year-end. With the adjusted balances, the MAM's issued, subscribed and paid up capital was to be increased to Rs 184.75 million from its FY06 capital of Rs 182.57 million.
During FY06, the year under review the MAM's gross revenue amounted to Rs 87.62 million (FY05: Rs 36.84 million) showing 138% increase over preceding year's.
Income from leasing at Rs 40.56 million in FY06 was 66.3% higher than FY05 leasing income at Rs 24.39 million and was 46.3% of gross revenue (FY05: 66.2%). The leasing income also included income on operating lease arrangements as well profit on termination of leases.
As regards lease portfolio, on 30.06.2006 the net investment in Ijarah amounted to Rs 130 million (FY05: Rs 148 million) showing 12% decrease.
The modaraba had entered into various lease agreements with profit rates ranging from 10% to 24% (FY05: 11% to 24%).
Lease agreements usually were written for three to five years period. These were generally secured against leased assets, personal/corporate guarantees and promissory notes given by the lessees and other collaterals.
After leasing income, the second largest component was "other income" at Rs 25.18 million out of which Rs 22.50 million was accounted for gain on disposal of fixed assets which is apparently one time gain.
Hypothetically, even after setting aside this gain, the FY06 total revenue would have been substantially higher than preceding year's total revenue.
The morabaha finances portfolio amounted to Rs 52.88 million out of which a substantial portion (81.1%) were accounted for in the current maturities, to mature by June 2007. This portfolio represents amount receivable against morabaha transactions ie sale of goods on a deferred payment basis at specified profit margin ranging from 10% to 24%. Profit on morabaha/musharika finance amounted to Rs 16.48 million (FY05: Rs 10.08 million) showing 63% increase Y.o.Y.
The company posted profit for the year at Rs 28.48 million (FY05: Rs 13.85 million) showing impressive growth of 106% over preceding year's. The Modaraba announced cash dividend at 20% identical to preceding year's.
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Performance Statistics (Million Rupees)
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June 30 2006 2005
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Certificate Capital Paid-Up: 182.57 182.57
Reserves & Surplus: 85.11 65.21
Certificate Holders' Equity: 267.68 247.78
L.T. Debts: 24.09 -
Security Deposits: 22.49 26.65
Net Assets of Modaraba Al-Tijarah
(due to merger): 2.18 -
Current Liabilities: 206.71 63.91
L/T Net Investment in Ijarah: 74.09 87.61
L.T. Morabaha Finance: 9.96 7.53
L.T. Investment: 17.95 18.00
L.T. Deposits: 3.16 0.04
Fixed Assets: 75.49 58.96
Current Assets: 342.50 166.20
Total Assets: 523.15 338.34
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Revenue Profit & Payout:
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Income from Leasing: 40.56 24.39
Profit on Morabaha/Musharika Finance: 16.48 10.08
Other Operating Income/(Loss): 5.40 (0.11)
Other Income: 25.18 2.48
Gross Revenue: 87.62 36.84
Profit (Distribution) on Borrowings: (11.32) (1.24)
Operating (Cost): (40.99) (16.52)
Impairment (Loss) -Net: (3.62) (3.69)
Share of (Loss) of an Associate: (0.05) -
Total (Expenditure): (55.98) (21.45)
Modaraba Company's Management Fee: (3.16) (1.54)
Profit for the year: 28.48 13.85
Earning Per Certificate (Rs): 1.56 0.76
Final Dividend for June 2005 @ 20%: (5.70) 2.77
(2004: @ 20%)
Modaraba Certificate Market
Price (Rs) on 20.03.07: 5.30 -
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Financial Ratios:
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Price/Earning Ratio: 3.40 -
Book Value Per Certificate (Rs): 14.66 13.57
Price Book Value Ratio: 0.36 -
Debt/Equity Ratio: 9:91 0:100
Current Ratio: 1.66 2.60
Lease Income/Total Income (%): 46.29 66.20
Profit from Musharika/Morabaha/
Total Income (%): 18.81 27.36
Net Profit/Total Income (%): 32.50 37.60
R.O.E. (%): 10.64 5.59
R.O.A. (%): 5.44 4.09
R.O.C.E. (%): 9.00 5.05
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