Half Year Report 31 December 2012

Transcription

1 Book Post Half Year Report Printed & Designed By: B &B Trading Co

2 S' REPORT 1- Director s Report 2- Shari ah Advisor s Report 3-Auditor s Report 4- Balance Sheet 5- Profit & Loss Account 6- Statement of Other Comprehensive Income 7- Cash Flow Statement 8- Statement of Changes in Equity 9- s to the Accounts On behalf of Board of Directors, it is my great pleasure to present un-audited accounts of First IBL Modaraba for the period ended,. ECONOMIC REVIEW The economy of Pakistan is continuously encountering with widening fiscal deficit and slower growth rate. The International Monetary Fund (IMF) has indicated that Pakistan will not succeed to achieve GDP growth target of 4.5 percent for the current fiscal year as it will grow by 3.7 percent during the period. Pakistan government has set GDP growth target 4.5 percent for the current fiscal year but World Bank and IMF projected growth rate mere 3.8% and 3.7% respectively. The IMF projected that inflation will remain high in Pakistan. The GDP target of 4.5 percent now looks difficult due to a host of factors that include, among others, gas shortage, high oil price, acute shortage of electricity supply, depression of Pak Rupees and current law &` order situation of Pakistan. OPERATIONAL REVIEW Comparing the first six month's result of your Modaraba with the last year, the following are evident: Ø Administrative expenses have been reduced from Rs million to Rs million. Ø Modaraba has recovered Rs million during the period. Ø Finance cost has been reduced to Rs. 5,000/- from Rs. 575,000/- Ø The Operating loss has decreased from Rs million to million Ø Dilution of Earnings per Certificate has reduced from 0.21 to 0.13 In addition to the above, the most significant development of the first six months of 13 is the approval granted by the Board of Directors for the settlement of Rs. 97million of non-performing assets of your Modaraba. The proceedings of the settlement are under way and is expected to fulfill necessary formalities with in this quarter i.e. Jan Mar 2013 (Inshallah). This settlement will directly upgrade the financial health of your Modaraba and would lay down the basis for future growth. Other matters are also being persuaded to the best possible extent. Further your team at Modaraba is making concrete efforts to recover non-performing facilities under the guidelines of BOD and CEO. Acknowledgement We would like to extend our gratitude to our value certificate holders for their commitment and confidence in their Modaraba, who have withstood with management in past years. We are grateful to the Regulatory Authorities for their guidance and continuous support and to the staff for constancy of their efforts. For and on behalf of Board of Directors Dr. Hasan Sohaib Murad Chairman/CEO February 28,

3 SHARI'AH ADVISOR'S REPORT FOR THE HALF YEAR ENDED DEC ' I have conducted the Shari'ah review of First IBL Modaraba managed by IBL Modaraba Management (Private) Limited, Modaraba Management Company for the Half year ended in accordance with the requirements of the Shari'ah Compliance and Shari'ah Audit Mechanism for Modarabas and report that except the observations as reported hereunder, in my opinion: i. iv. To the best of my information and according to the explanations given to me, the business transactions undertaken by the Modaraba and all other matters incidental thereto are in conformity with the Shari'ah requirements as well as the requirements of the Prospectus, Islamic Financial Accounting Standards as applicable in Pakistan and the Shari'ah Compliance and Shari'ah Audit Regulations for Modarabas. v) The major portfolio of First IBL Modaraba relates to Ijarah, Murabaha & Musharakah. Observations and Recommendation 1- First IBL Modaraba has an investment of 100,000 shares of First Punjab Modaaba, a non shahriah complaint entity. It is advised to dispose-off these shares as soon as possible. 2- Murabaha facility of Rs. 23 million extended to a certain entity is not properly documented as required by the Shahriah Audit Mechanism. The said transaction was undertaken before the applicability of Shahriah Audit regulations. It is recommended to Modaraba to take appropriate measures for premature termination of the said facility. Conclusion The Modaraba has introduced a mechanism which has strengthened the Shari'ah compliance, in letter and spirit and the systems, procedures and policies adopted by the Modaraba are in line with the Shari'ah principles; ii. following were the major developments that took place during the year: In this context of detailed Shari'ah review carried by the undersigned for the half year ended,, transactions during the period executed by FIBLM were found upto the mark as required by Shariah Audit Regulations for Modarabas. Mufti Salman Ahmad Khan Shari'ah Advisor Dated: February 28, 2013 a) Stopping non shahriah compliant investments. b) Closure of bank accounts in conventional banks. c) Research and new product development d) Adopted new inducted Shari'ah Compliance and Shari'ah Audit Mechanism. Followed Model Islamic Financing Agreements approved by Religious Board. e) Training and Development of staff iii. Modaraba did not enter into any agreement during the half year ended,. 3- It is advised to open a charity account to maintain charity funds in more efficient manners. 4- It is advised to enter into Takaful arrangements to secure its assets unless not available. 5- It is recommended that training of staff should be made for Islamic Mode of Finance by the Shari'ah Advisor or Authorized Training Institute. 2 Introduction Auditors' Report to the Certificate Holders on Review of Interim Financial Information We have reviewed the accompanying condensed interim balance sheet of First IBL Modaraba as at and the related condensed interim profit and loss account, condensed interim statement of comprehensive income, condensed interim cash flow statement, condensed interim statement of changes in equity and notes to the accounts for the six months period then ended (here-in-after referred to as the interim financial information ). Management is responsible for the preparation and presentation of this interim financial information in accordance with approved accounting standards as applicable in Pakistan for interim financial reporting. Our responsibility is to express a conclusion on this interim financial information based on our review. The figures of the condensed profit & loss account and condensed interim statement of comprehensive income for the quarter ended have not been reviewed as we are required to review only cumulative figures for the half year ended on that date. Scope of Review We conducted our review in accordance with International Standard on Review Engagements 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Basis for Qualified Conclusion Our review indicates that: a) b) c) d) Ijarah rentals receivable as shown by note 5 include Ijarah rentals of Rs million that are required to be provided for this year under Part III, paragraph 5 (1B) of Prudential Regulations applicable to Modaraba. Whereas management made provision against doubtful Ijarah rentals receivable of Rs million as explained in the said note. Short term Investments, as shown in note 6 include shares of book value of Rs. 2.1 million ( : Rs million) which have not been confirmed through CDC holding report at the period end. These shares are stated to be not in the name of Modaraba and we have not been shown any other document as an evidence from which ownership of Modaraba of the said shares could be confirmed. Musharaka receivables as shown by note 7 include principal and profit receivable as shown by note 8 include amounts of Rs million and Rs million respectively against which provision should have been created as on under Part III, Paragraph 5 (1A) of Prudential Regulations applicable to Modaraba. Whereas the management made provision against doubtful Musharaka principal receivables and against doubtful profit receivable of Rs million and Rs million respectively as on as explained in note 7. Re-measurement of provision against doubtful principal receivables and against doubtful profit receivable is not made during the period under review by management. We had neither been shown documentation/ confirmation for the receivable balances aggregating to Rs million as on included in the heads ''Balance with Broker'' and Others under Advances, deposits, prepayments and other receivables as per note 8 nor any documents/records were made available to verify such balances by other alternative procedures during audit. The said amount includes receivable balance of Rs million from a party which had confirmed receivable balance as on from the Modaraba of Rs million instead of payable balance. We had not been given explanation or provided reconciliation of the aforesaid difference during audit. Our review procedures during the period also do not indicate that the receivable balances are realizable and have not been provided reconciliation/ explanation of the aforementioned difference. 3

4 e) f) Investment in subsidiary as shown by note 10 is stated to be made up of investment representing 80% equity of Alka Power (Pvt.) Limited at a cost of Rs. 6.4 million and advance amounting to Rs million. The advance amount exceeds the exposure limit by Rs million ( : Rs million) as required by Para 1 of Part II (A) of Prudential Regulations. Confirmation received from the said company during audit for the year ended showed investment of Rs. 6.0 million which is claimed to form 23% of the equity and instead of the advance an amount of Rs million (net) as on 2011 receivable from the Modaraba. It has been representated by the Modaraba that at the time of investment the equity acquired was 80% of the total, the balance of advance is correct and reduction in shareholding and balance receivable by the subsidiary are without notice and without following due process. The latest audited financial statements of the subsidiary and/ or other documentation by the subsidiary could not be made available to the auditors and therefore necessary verifications and impairment testing could not be performed. Had the management made the required provisions as mentioned in para a, b, c, d and e then the amount of assets would have been reduced by aforementioned amounts and consequently loss before tax for the period would have increased by the same amounts. Modaraba has entered into agreements dated 17 which are being implemented as described in note 7.5, the entries for incorporating the effect of the agreements in the financial statements would be passed after completion of legal requirements. As a result the related assets mentioned in Para c & e above would be replaced by and to the extent of the value of building property amounting to Rs million which is being acquired for consideration of transfer of the said assets as per the said agreements and on successful completion of the agreed arrangement the observations regarding related assets mentioned in para c & e would not be applicable. Modaraba has not deposited income tax withheld on salaries and on payment for goods and services of Rs million ( : Rs million) as disclosed in note 12 which is non compliance of income tax laws. The said non compliance may also result in penalties and additional surcharge; these amounts have not been ascertained and provided for or disclosed in interim financial information under the head ''Contingencies''. Auditors' report on annual financial statements for the year ended on also contained qualification on the matters referred in para a to f except that in certain cases the figures have been restated. Qualified Conclusion Based on our review, with the exception of the financial impact of the matters and departures from Prudential Regulations described in the preceding paragraphs, nothing has come to our attention that causes us to believe that the accompanying interim financial information is not prepared, in all material respects, in accordance with approved accounting standards as applicable in Pakistan for interim financial reporting. Rahman Sarfaraz Rahim Iqbal Rafiq CHARTERED ACCOUNTANTS Engagement Partner: A. Rahman Mir Lahore: February 28, 2013 FIRST IBL MODARABA CONDENSED INTERIM BALANCE SHEET (UN-AUDITED) AS AT DECEMBER ASSETS Current Assets Ijarah rentals receivable Short term investments Musharaka receivables Advances, deposits, prepayments and other receivables Cash & bank balances Total current assets Non-current assets Assets in own use Assets subject to Ijarah Intangible assets Long term deposits Investment in subsidiary Long term murabaha finance Total non-current assets TOTAL ASSETS LIABILITIES & EQUITY Current liabilities Musharaka finance Short term finance Accrued and other liabilities Current portion of security deposit Unclaimed profit distribution Total current liabilities Non-current liabilities Long term security deposits TOTAL LIABILITIES CAPITAL & RESERVES Authorised certificate capital 50,000,000 ( : 50,000,000) certificates of Rs. 10 each Certificate capital Issued, subscribed and paid-up certificate capital 18,500,000 ( :18,500,000) certificates of Rs.10 each issued as fully paid in cash 1,687,500 ( :1,687,500) certificates of Rs.10 each issued as fully paid bonus Reserves Unappropriated profit/(loss) TOTAL EQUITY & LIABILITIES Contingencies and Commitments (Un-audited) (Audited) Rupees '000' Rupees '000' Restated 5 1,882 1, ,626 2, ,537 72, ,308 51,371 17, , , ,146 7,119 9, ,205 3, ,306 57, ,000 23,000 92,092 95, , ,554 12,142 14, ,782 12,853 7,229 6,491 7,657 7,694 38,810 41, ,656 2,704 40,466 44, , , , ,000 16,875 16, , ,875 40,281 39,993 (65,344) (62,706) 176, , , ,554 The annexed notes 1 to 17 form an integral part of this condensed interim financial information. 4 5

5 FIRST IBL MODARABA CONDENSED INTERIM PROFIT AND LOSS ACCOUNT (UN-AUDITED) FOR THE HALF YEAR ENDED DECEMBER FIRST IBL MODARABA CONDENSED INTERIM STATEMENT OF OTHER COMPREHENSIVE INCOME (UN-AUDITED) FOR THE HALF YEAR ENDED DECEMBER INCOME Profit on musharaka financing Income from Ijarah financing Profit on murabaha financing Return on investments Other income/(expenses) Half year ended Quarter ended Rupees '000' Rupees '000' Rupees '000' Rupees '000' ,021 2,401 1, ,013 2,013 1,073 1, , (35) 5,095 5,343 2,716 2,183 Profit/(Loss) after tax for the period (2,638) (4,187) (762) (2,287) Other comprehensive income: Half year ended Quarter ended Rupees '000' Rupees '000' Rupees '000' Rupees '000' Net unrealised gain/(loss) on available-for-sale investments 288 (955) 288 (752) EXPENSES Administrative and general expenses Amortization on assets subject to Ijarah Unrealised loss/(gain) on re-measurement of investments 'at fair value through profit or loss' Finance cost Operating Profit/(Loss) 5,601 6,079 2,746 3,477 2,296 2, (169) 22 (172) ,733 9,530 3,478 4,470 (2,638) (4,187) (762) (2,287) Total comprehensive income for the period (2,350) (5,142) (474) (3,039) The annexed notes 1 to 17 form an integral part of this condensed interim financial information. Management fee Profit/(loss) before taxation Taxation (2,638) (4,187) (762) (2,287) Profit/(loss) after taxation (2,638) (4,187) (762) (2,287) Earnings/(loss) per certificate basic/diluted (0.13) (0.21) (0.04) (0.11) The annexed notes 1 to 17 form an integral part of this condensed interim financial information. 6 7

6 FIRST IBL MODARABA CONDENSED INTERIM CASH FLOW STATEMENT (UN-AUDITED) FOR THE HALF YEAR ENDED DECEMBER CASH FLOW FROM OPERATING ACTIVITIES 2011 (Un-audited) (Un-audited) Rupees '000' Rupees '000' Profit/(Loss) before taxation (2,638) (4,187) Adjustments for non-cash and other items: Depreciation on fixed assets in own use Amortization on Intangible assets Amortization on Ijarah assets 2,296 2,854 Finance cost (Gain) / loss on sale of Ijarah assets (4) - Revaluation (gain)/loss on investments at ''fair value (169) 22 through profit or loss'' Dividend income (4) (39) 2,134 4,179 (504) (8) (Increase)/decrease in current assets Ijarah rentals receivable 36 (75) Musharaka receivable 18, Advance, deposits, prepayments and other receivables 3,064 (1,974) Increase/(decrease) in current liabilities 21,542 (1,260) Musharaka arrangement (2,500) - Short term finance (8) 135 Accrued and other liabilities (1,071) 2,8 Current portion of security deposits (2,841) 2,453 Cash flow from operating activities 18,197 1,185 Finance cost paid (5) (368) Taxes paid (1) (3) Net cash generated from / (used in) operating activities 18, CASH FLOW FROM INVESTING ACTIVITIES Purchase of fixed assets for own use - (1,199) Long term deposits 200 (307) Customers' security deposits received/ (paid) during the period (1,048) - Proceeds from sale of assets subject to Ijarah Dividend received 4 39 Net cash generated from / (used in) investing activities (368) (1,467) CASH FLOW FROM FINANCING ACTIVITIES Profit paid to certificate holders (36) - Net cash generated from / (used in) financing activities (36) - Net (decrease)/ increase in cash and cash equivalents during the period 17,787 (653) Cash and bank balances at the beginning of the period 46 1,976 Cash and bank balances at end of the period 17,833 1,323 The annexed notes 1 to 17 form an integral part of this condensed interim financial information. 8 FIRST IBL MODARABA CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY (UN-AUDITED) FOR THE HALF YEAR ENDED DECEMBER Reserves Total Unappropriated profit/(loss) Sub Total Unrealized (loss)/gain on revaluation of available for sale investments Statutory reserve Certificate capital Rupees '000' ,875 34,4 4,859 39,173 (10,070) 230,978 Balance as at 2011 (Before Restatement) (12,163) (12,163) Decrease in ''profit receivable on Musharaka finance'', ''profit held in suspense account'', ''Musharaka receivables'' and "accumulated impairmenton Musharaka receivables" (Refer note 16) 201,875 34,4 4,859 39,173 (22,233) 218,815 Balance as at Restated - - (955) (955) (4,187) (5,142) Total comprehensiveincomefor the six months period ended ,875 34,4 3,904 38,218 (26,420) 213,673 Balance as at ,775 1,775 (36,286) (34,511) Total comprehensiveincomefor the six months period ended The annexed notes 1 to 17 form an integral part of this condensed interim financial information ,875 34,4 5,679 39,993 (62,706) 179,162 Balance as at (2,638) (2,350) Total comprehensiveincomefor the six months period ended 201,875 34,4 5,967 40,281 (65,344) 176,812 Balance as at

7 1 2 FIRST IBL MODARABA SELECTED NOTES TO THE CONDENSED INTERIM FINANCIAL INFORMATION (Un-Audited) FOR THE HALF YEAR ENDED DECEMBER STATUS AND NATURE OF BUSINESS First IBL Modaraba ("the Modaraba") is a multi purpose, perpetual and multi dimensional Modaraba formed under the Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980 and Rules framed there under, having its registered office at Suite # 105, 1st Floor, Fortune Center, 45-A, Block-6, PECHS, Shahrah-e-Faisal, Karachi. The Modaraba is managed by IBL Modaraba Management (Private) Limited, incorporated in Pakistan under the Companies Ordinance, 1984 and registered with Registrar of Modaraba Companies. The Modaraba is listed on Karachi, Lahore and Islamabad stock exchanges. The Modaraba commenced its operations on 19 October 1989 and is currently engaged in various Islamic modes of financing and operations including Ijarah, Musharaka and Murabaha arrangements. BASIS OF PREPARATION This condensed interim financial information does not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the financial statements of the Modaraba for the year ended. This condensed interim financial information is un-audited but subject to limited scope review by the auditors except for the figures of the condensed interim profit and loss account and condensed interim statement of comprehensive income for the quarters ended and Movement in accumulated impairment is as follows: As at beginning of the period 5,351 1,051 Recognized during the period 1,277 5,285 Reversed during the period - (984) As at end of the period 6,628 5,351 During the period provision amounting to Rs. 680thousands (: Rs. 716 thousands) against over due Ijarah rentals as required by Part III Para 5 (1 B) of Prudential Regulations has not been made. 6 SHORT TERM INVESTMENTS Investments in listed equity securities classified as: Available for sale 6.1 2,282 1,994 At fair value through profit or loss STATEMENT OF COMPLIANCE This condensed interim financial information of the Modaraba for the six months period ended has been prepared in accordance with the requirements of the International Accounting Standard 34 - "Interim Financial Reporting", Modaraba companies and Modaraba (Floatation and Control) Ordinance 1980, the Modaraba Companies and Modaraba Rules 1981, Islamic Financial Accounting Standards (IFAS) issued by the Institute of Chartered Accountants of Pakistan, as are notified under provisions of Companies Ordinance, 1984 and made applicable to Modaraba. In case where requirements differ the provisions of or directives issued under the Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980, Modaraba Companies and Modaraba Rules, 1981 or the directives issued by SECP have been followed. 6.1 Available for sale Holdings are in ordinary certificates / shares of Rupees 10 each. No. of shares / Certificates Name of entity 2,626 2, ACCOUNTING POLICIES The accounting policies and the methods of computation adopted in the preparation of this condensed interim financial information are the same as those applied in the preparation of the financial statement for the year ended. Previous period's figures are re-arranged/re-classified where necessary to facilitate comparison and are rounded off to the nearest thousand rupee. Appropriate disclosure is given in relevant note in case of material rearrangement. 5 IJARAH RENTALS RECEIVABLE - SECURED Considered good Considered doubtful Accumulated Impairment 1,882 1,918 6,628 5,351 8,510 7, (6,628) (5,351) 1,882 1,918 These represent rentals receivable against assets leased out under Ijarah contracts. The Modaraba has provided facility to its associate undertaking, as detailed in note 15, which is prohibited by the prudential regulations Part II Para 7(3). 3,600 2,572 Searle Pakistan Ltd , ,500 Lafarge Pakistan Cement Ltd. 1,990 1,696 5,700 5,700 Arif Habib Corporation Ltd , ,772 2,282 1,994 Investments include sharesof Rs. 2,127thousands ( : Rs. 1,872 thousands) not in the name of Modaraba. 6.2 At fair value through profit and loss Holdings are in ordinary certificates / shares of Rupees 10 each. No. of shares / Certificates Name of entity 2,241 2,241 Invest Capital Investment Bank Ltd Attock Refinery Ltd , ,000 First Punjab Modaraba , , It includes shares of Rs 3,810/- ( : Rs 1,815/-) not in the name of Modaraba

8 7 MUSHARAKA RECEIVABLES - SECURED Considered good Considered doubtful Restated 54,537 72,979 56,099 56, , ,078 Accumulated Impairment 7.2 (56,099) (56,099) 54,537 72,979 This represents Musharaka finance provided to customers for business activities for a maximum period of twelve months. The provisional rate of profit on these finance s ranges from 10% to 29% ( : 10% to 29%) per annum and secured by way of hypothecation of goods & book debts. This charge is not registered under the Companies Ordinance, This represents provision made against over due principal amount of Musharaka investment on time based criteria in terms of the requirement of the Prudential Regulations applicable to Modaraba till. The profit accrued of Rs. 18,141 thousands ( : Rs.18,141 thousands) is held in suspense account (Refer note 8). The management expects effective recovery in the following year and therefore had under provided provision against principal by Rs million and profit by Rs million and remeasurement is not made during the period ended. Movement in accumulated impairment is as follows: As at beginning of the period Recognized during the period Reversed during the period 56,099 30,082-26, ADVANCES, DEPOSITS, PREPAYMENTS AND OTHER RECEIVABLES Advance income tax Advances to employees against salary Prepayments ,526 1,478 Accrued profit: Profit receivable on Musharaka finance 35,026 35,620 Less: Profit held in suspense account 7.2 (18,141) (18,141) 16,885 17,479 Profit receivable on Murabaha financing 1, Other receivables: Restated Receivable from Modaraba management company ,550 13,393 Balance with broker 8.2 4,776 4,776 Others 12,565 13,910 28,891 32,079 48,308 51, As at end of the period 56,099 56,099 This includes facilities provided to its associate undertakings as detailed in note 15 which is prohibited by the prudential regulations Part II Para 7(3), section 17(2) of Modaraba Ordinance, 1980 and Rule of Modaraba Rules. The outstanding principal is expected to be realized by the Modaraba on respective maturity dates. Previous year's figure of ''Musharaka receivables'' and "accumulated impairment on Musharaka receivables" is restated (Refer note 16 for details). Modaraba has entered into agreements with Institute of Leadership & Management (ILM - an associated undertaking) and Dosslani Securities (Pvt) Limited dated 17 after approval of Board of Directors of Management Company in their meeting held on 7. Under the terms of this agreement the balance receivable of Rs 39,782 thousands from Dosslani Securities (Pvt) Limited would be paid by ILM and the equity holding in subsidiary/ Alka Power (Pvt.) Ltd. of Rs. 6,400 thousands & advances of Rs. 50,906 thousands would be transferred to ILM against consideration by way of cash or ownership rights of fourth floor measuring 13,730 square feet of "Library Building" of ILM situated at C-II, Johar Town, Lahore at an aggregate price of Rs. 97,088 thousands. Transfer of ownership rights in the Revenue record has not yet been made, accounting entries would be made in the books of Modaraba after the Revenue record have been amended. However Modaraba has entered into tenancy agreement with University of Management & Technology (associated undertaking of ILM) with effect from 1 for twenty four months at a monthly rent of Rs thousands; rent for one month is credited in bank statement on This represents the amount that is to be reimbursed to Modaraba in respect of rent of office and other expenses.during the period expenses paid on behalf of management company amount to Rs thousands ( : Rs.2,127 thousands) and during the period Modaraba was able to adjust Rs. 1,900 thousands ( : Nil). The advances are in contravention of the Modaraba Ordinance and Rules there under. 8.2 This represents amount receivable from Khoja's Capital Management, associated company. 8.3 Previous year's figure of ''profit receivable on Musharaka finance'' and ''profit held in suspense account'' are restated (Refer note 16 for details). 9 ASSETS IN OWN USE , Opening written down value 1,146 2,778 Additions during the period Depreciation charge (272) (1,940) 874 1,

9 9.1.1 Additions during the period Additions: Six months Ended Year Ended Vehicles - 2 Office Equipments and Computers INVESTMENT IN SUBSIDIARY Equity investment ,400 6,400 Advance ,906 50,906 57,306 57,306 This represents equity investment in the ordinary shares of Alka Power (Private) Limited. Modaraba holds 80% (30 June : 80%) control over subsidiary through 80,000 shares ( : 80,000 shares) of Rs. 100/- each, acquired at a cost of Rs. 80/- per share. However, the approval for investment of SECP is for Rs. 6.0 million. The amount exceeds the approved amount by Rs. 0.4 million. This represents advance to Alka Power (Private) Limited which is stated to be adjustable against further issue of shares of shares of Rs.100/- each at par. The advance amount exceeds the exposure limit by Rs. 15,073 thousands ( : Rs. 7,142.6 thousands) as required by Para 1 of Part II (A) of Prudential Regulations. Agreement for transfer of these investments to ILM has been made but the transaction has net been completed on (Refer note 7.5) 11 LONG TERM MURABAHA FINANCE ,000 23, Contribution is not deposited by company in separate bank account and requirements of Companies Ordinance, 1984 have not been complied with. CONTINGENCIES AND COMMITMENTS 13.1 Contingencies: The Modaraba has provided guarantee amounting to Rs. 43,283 thousands ( : Rs. 43,283 thousands) on behalf of contractor which is secured against 10% cash margin of the guarantee amount, lien over immovable property and personal guarantee of the contractor. The guarantee is subsequently matured on 13 January There has been no change in the contingencies since Commitment: The Modaraba has not made any capital commitments ( : Nil) at the balance sheet date. 14 TAXATION: No provision with respect to current and deferred taxation has been made in this condensed interim financial information on the premise that under the current tax law the income of Modaraba from non trading activities is exempt from income tax provided that it distributes ninety percent of its profit to certificate holders out of current period s total profit after appropriation to statutory reserves. The Modaraba intends to continue to avail the said exemption. 15 RELATED PARTY TRANSACTIONS The related parties of the Modaraba comprise of its Management Company, major certificate holders of the Modaraba and their close family members, directors of the management company and their close family members, key management personnel of the management company and their close family members, the Provident Fund and entities with common directors or under common management. Contribution to the provident fund is made in accordance with the services rules. The Modaraba management fee is accrued in accordance with the requirements of Modaraba regulations, remuneration of the key management personnel are in accordance with terms of their employment. Other transactions are also at agreed terms. Detail of transactions with related parties and balances with them as at the period end were as follows: Transactions during the period IBL Modaraba Management (Private) Limited: Relationship This represents Murabaha arrangements made with a single party on 7 February 2011 for a period of three years, maturing on 7 March 2014 incorporating profit at the rate of 17.5% ( : 17.5%) p.a. payable monthly. The facility is secured by hypothecation of stocks, spares, stores & other stocks of the value of Rs. 30,000,000/- (June 30, :Rs.30,000,000/-) plus personal guarantee of borrower and demand promissory note. Evidence of registration of charge on stocks etc. is not on record. 12 ACCRUED AND OTHER LIABILITIES Accrued expenses 725 1,014 Musharaka profit payable 1,430 1,430 Contribution to Provident Fund payable ,719 1,644 Withholding tax 1,359 1,449 Other liabilities 6,549 7,6 11,782 12,853 Expenses paid on behalf of Management Company Receipts during the period Associated undertakings: University of Management and Technology Recovery against Musharaka Mark up charged on Musharaka Musharaka mark up received Management Company Holds 15.2% of the paid up certificates of Modaraba ,900-15,

10 2011 Institute of leadership & Management -Rupees '000'- Recovery against Musharaka Mark up charged on Musharaka Musharaka mark up received Ijarah rental accrued Ijarah rental received Key management personnel remuneration: Salaries and benefits Contribution to Staff Provident Fund Other benefits Number of persons Payment received from Chief Executive Officer of management company Common management Outstanding Balances at the period end: Receivable from Modaraba management company Receivable from University of Management and Technology Institute of leadership & Management Investment in Subsidiary-Alka Power (Pvt)Limited Receivable from Khoja's Capital Management Receivable from chief executive officer of management company 2, ,752 3, ,5 - Restated 11,550 13,393 33,403 49,403 14,464 17,464 57,306 57,306 4,776 4,776-1,5 "Musharaka Receivables" before restatement (Net of provision) Decrease in "Musharaka Receivables"- relating to year ended June 2011 Decrease in "accumulated impairment on Musharaka receivable" 16.4 (provision) "Musharaka receivables" after restatement (Net of provision) "Unappropriated loss" before restatement Increase in "unappropriated loss" 16.5 Reduction in "unappropriated loss" 16.6 "Unappropriated loss"- restated 85,253 (16,003) 3,729 (12,274) 72,979 (10,070) (20,362) 8,199 (12,163) (22,233) 16.1 "Profit receivable on Musharaka finance'' was erroneously excess accrued which is corrected. The balance is therefore restated after increasing balance of ''unappropriated loss'' The figure of "Profit on Musharaka receivables held in suspense account'' is reduced due to decrease in ''profit receivable on Musharaka finance'' as explained in note The balance is therefore restated after reducing balance of "unappropriated loss" Recoveries on account of ''Musharaka receivables'' (principal) were erroneously treated as recovery of ''profit receivable on Musharaka finance'' as stated in note The balance is restated after increasing balance of '' unappropriated loss''. 16 PRIOR PERIOD ADJUSTMENTS 16.4 The figure of "accumulated impairment on Musharaka receivables'' is reduced due to decrease in ''Musharaka receivables'' as explained in note The balance is therefore restated after reducing balance of "unappropriated loss". The Modaraba has restated corresponding figures by correcting prior periods' items as required under IAS 8 ''Accounting policies, Changes in accounting estimates and errors" Para 42 by restating opening balances of assets and equity as detailed below: 16.5 Refer note 16.1 and 16.3 above for details. " Profit receivable on Musharka Finance" before restatement (Net of provision) Decrease in ''Profit receivable on Musharaka Finance'' 16.1 Decrease in ''Profit held in suspense account'' (provision) 16.2 "Profit receivable on Musharaka Finance"- restated Rs. '000' 17,368 (4,359) 4, , Refer note 16.2 and 16.4 above for details. DATE OF AUTHORIZATION FOR ISSUE This condensed interim financial information was authorized for issue by the Board of Directors of the Modaraba Management Company on February 28,