Quarterly Report September 2017

Transcription

1 Quarterly Report September 2017

2 Contents 02 Modaraba Information 03 Director s Report 07 Condensed Interim Balance Sheet (Unaudited) 09 Condensed Interim Statement of Comprehensive Income (Unaudited) 08 Condensed Interim Profit & Loss Account (Unaudited) 10 Condensed Interim Cash Flow Statement (Unaudited) 11 Condensed Interim Statement of Changes in Equity (Unaudited) 12 Notes to and forming part of Condensed Interim Financial Statement (Unaudited)

3 02 Allied Rental Modaraba

4 For the period ended September 30, 2017 The Board of Directors of Allied Engineering Management Company (Private) Limited, the management company of Allied Rental Modaraba, is pleased to present to its certificate holders the Directors Report together with un-audited accounts of the Modaraba for the three months period ended September 30, Financial Highlights Rs in 000 Revenue from operations 820,148 Profit for the period 122,181 Net profit margin 14.9% Earning per certificate Re. 0.7 Investment in Rental Fleet 582,721 Review of Operations We are pleased to report that Modaraba registered Sales Growth of 20.5% from Rs. 681 Million to Rs. 820 Million as compared to corresponding period last year. Accordingly, the net profits for the period also increased by 42% to Rs. 122 million as compared to Rs. 86 million for the corresponding period last year. This is mainly attributable to the diversification strategy adopted by the Management to Non Power sectors of the Rental business, as we see our investment in other segments of the Rental market including Logistics bearing results. Sales from our Machines and Cranes segment raised by around 95%, rising to Rs. 109 Millions during the quarter from Rs. 56 Million for the corresponding period last year, this is contributed by our increased investment in the assets portfolio and better price realization. Machines and Cranes are inducted to cater for the increased demand from the Rental market for CPEC Projects. Further, representing almost half of the revenue of the Modaraba, the Power Generation Segment contributed almost Rs. 400 Millions to the sales. This is around 17% higher than the sales of the corresponding period last year. With the availability of LNG, we see renewed growth momentum for Long term Gas Engine Rental deals, especially for fuel efficient engines. With better demand levels from Cement and real estate sectors, our deployment levels of both our higher capacity diesel engines and gas engine rentals remained at satisfactorily levels during the period. Sales from our Inbound and Outbound Logistics segment remained in line and contributed Rs. 279 Millions to the revenue as compared to Rs. 254 Millions of the corresponding period last year, however, we see further strong growth prospects, both in term of development of this segment in the country vis-à-vis its potential with specific reference to CPEC. The operating expense for the period went up by Rs. 87 Million, lower than the rate of increase in Rental Sales, thereby resulting in 3.7% increase in the Gross Margin percentage. The main increase in expenses is recorded in salaries and wages expenses which went up by 37% mainly on account of higher labor factor element to handle the increased asset portfolio, Fleet vehicles running cost also raised by 35% due to higher Rental Logistics Sales. Ijarah rentals continue to decline as our major contracts mature during the period and assets transferred to the Modaraba as its residual values. Further, depreciation for the quarter slightly went up by Rs. 1 Million compared to corresponding quarter. Administrative and distribution expenses increased by Rs. 10 Million to Rs. 44 Million (2016: Rs. 34 Million) in line with inflation and putting resources in place to handle diversified business portfolio. Mark up charges increased by Rs. 20 Million to Rs. 56 Million during the quarter, though the mark up rates remained constant or slightly declined compared to previous year, but due to higher Capital investment and resulting increase in the borrowing level, the markup for the period went up. Quarterly Report

5 The Management is upbeat on the CPEC development and tremendous opportunities it can generate for the Modaraba, but will also remain cautious and prudent for its investment on the Rental Power segment. We always strive to keep special emphasis on customer satisfaction, also ensuring in the process that we always follow the Islamic Shariah principles in all our business transactions. Acknowledgement The Board wishes to place on record its sincere gratitude to the Registrar Modarabas, Director Modarabas and his support staff at SECP, Religious Board, bankers, customers and its business partners for their continued support and guidance. On Behalf on the Board October 27, 2017 Murtaza Ahmed Ali Chief Executive 04 Allied Rental Modaraba

6 Quarterly Report

7 06 Allied Rental Modaraba

8 Condensed Interim Balance Sheet (Unaudited) As at September 30, 2017 Note Unaudited Audited Sep 30, 2017 Jun 30, 2017 ASSETS Current assets Cash and bank balances 181,453, ,439,392 Ijarah rentals receivable 1,035,769, ,904,537 Operation and maintenance income receivable 29,354,955 29,676,680 Advances, deposits, prepayments and other receivable 320,329, ,981,882 Spare parts 106,365,753 72,886,796 1,673,272,913 1,666,889,287 Non-current assets Long-term security deposits 50,000 50,000 Diminishing musharaka financing - secured 5,083,195 6,769,730 Fixed assets in own use - tangible 86,800, ,982,296 Intangible asset for own use 6,974,939 7,452,828 Ijarah assets 6 6,316,337,403 6,059,664,727 Capital work-in-progress 673,625, ,143,800 7,088,871,781 6,694,063,381 Total assets 8,762,144,694 8,360,952,668 LIABILITIES Current liabilities Creditors, accrued and other liabilities 577,565, ,767,856 Dividend Payable 263,950, ,887 Bai Muajjal - secured - 99,694,340 Payable to the Modaraba Management Company 14,014,345 13,982,571 Current portion of Diminishing Musharakah financing payable 7 973,088, ,791,146 Current portion of security deposits 39,000,000 34,423,000 1,867,619,018 1,533,371,800 Non-current liabilities Diminishing Musharakah financing payable - secured 7 2,255,774,868 2,043,013,353 Deferred liabilities 52,010,393 52,067,969 Other long-term employee benefits 15,895,748 15,973,327 Security deposits 53,358,000 57,935,000 2,377,039,009 2,168,989,649 Total liabilities 4,244,658,027 3,702,361,449 NET ASSETS 4,517,486,667 4,658,591,219 FINANCED BY : CAPITAL AND RESERVES Authorised certificate capital 225,000,000 (2017 : 225,00,000) Modaraba certificates of Rs.10 each 2,250,000,000 2,250,000,000 Issued, subscribed and paid-up certificate capital 1,755,000,000 1,755,000,000 Premium on issue of right certificates 1,133,212,500 1,133,212,500 Statutory (mandatory) reserve 1,463,126,925 1,463,126,925 Unappropriated profit 166,147, ,251,794 4,517,486,667 4,658,591,219 CONTINGENCIES AND COMMITMENTS 8 The annexed notes from 1 to 14 form an integral part of these condensed interim financial statements. Abdul Rahim Suriya Quarterly Report

9 Condensed Interim Profit and Loss Account (Unaudited) For the three months period ended September 30, 2017 Note Three months period ended Sep 30, 2017 Sep 30, 2016 Ijarah rentals 788,934, ,983,175 Operation and maintenance income 31,213,470 26,810, ,147, ,793,277 Operating expenses 9 (603,662,846) (516,340,657) Gross Profit 216,485, ,452,620 Administrative and distribution expenses 10 (44,085,764) (33,754,794) Provision against potential Ijarah losses and operation and maintenance income - - Finance costs 11 (56,115,218) (35,731,398) Other income / (Loss) 5,861,312 (7,142,295) (94,339,670) (76,628,487) 122,145,448 87,824,133 Modaraba Management Company's remuneration ,145,448 87,824,133 Workers' welfare fund - (1,756,483) Profit for the year before taxation 122,145,448 86,067,650 Taxation Profit for the year after taxation 122,145,448 86,067,650 Earnings per certificate - basic & diluted The annexed notes from 1 to 14 form an integral part of these condensed interim financial statements. Abdul Rahim Suriya 08 Allied Rental Modaraba

10 Condensed Interim Statement of Comprehensive Income (Unaudited) For the three months period ended September 30, 2017 Three months period ended Sep 30, 2017 Sep 30, 2016 Profit for the period after taxation 122,145,448 86,067,650 Other comprehensive income for the period - - Total comprehensive income for the period 122,145,448 86,067,650 The annexed notes from 1 to 14 form an integral part of these condensed interim financial statements. Abdul Rahim Suriya Quarterly Report

11 Condensed Interim Cash Flow Statement (Unaudited) For the three months period ended September 30, 2017 Three months period ended Sep 30, 2017 Sep 30, 2016 CASH FLOWS FROM OPERATING ACTIVITIES Profit for the period 122,145,448 86,067,650 Adjustments for non-cash charges and other items: Depreciation 186,225, ,832,208 Financial charges including bank charges 56,115,218 35,731,398 Loss on disposal of Ijarah assets - 9,696, ,486, ,327,803 (Increase) / decrease in assets Ijarah rentals receivable (47,864,464) (4,882,801) Operation and maintenance income receivable 321,725 (4,175,957) Advances, deposits and other receivable (51,347,507) (11,392,170) Spare parts (33,478,957) (4,611,074) Diminishing musharaka financing - secured 1,686,535 - (130,682,668) (25,062,002) Increase / (decrease) in liabilities Creditors, accrued and other liabilities (excluding accrued financial charges) 10,416,489 (57,914,899) Payable to the Modaraba Management Company 31,774 1,053,655 10,448,263 (56,861,244) Cash generated from / (utilized in) operations (120,234,405) (81,923,246) Gratuity paid (57,576) - Compensated absence paid (77,579) (240,272) Financial charges paid (78,746,730) (37,872,216) Net cash flows from operating activities 165,369, ,292,069 CASH FLOWS FROM INVESTING ACTIVITIES Fixed capital expenditure Proceeds from disposal of Ijarah assets (582,720,542) - (328,748,194) 34,038,013 Net cash flows from investing activities (582,720,542) (294,710,181) CASH FLOWS FROM FINANCING ACTIVITIES Diminishing Musharakah financing availed 638,709, ,550,531 Bai Muajjal facility availed - 99,690,149 Repayment of Bai Muajjal facility (99,694,340) (99,714,147) Repayment of Diminishing Musharakah financing (247,650,332) (268,046,696) Net cash flows from financing activities 291,364,981 81,479,837 Net decrease in cash and cash equivalents (125,985,577) (16,938,275) Cash and cash equivalents at the beginning of the period 307,439,392 57,352, ,453,815 40,414,697 The annexed notes from 1 to 14 form an integral part of these condensed interim financial statements. Abdul Rahim Suriya 10 Allied Rental Modaraba

12 Condensed Interim Statement of Changes in Equity (Unaudited) For the three months period ended September 30, 2017 Paid up certificate capital Premium on issue of certificates Statutory (mandatory) reserve Unappropriated profit Total Balance as at June 30, ,755,000,000 1,133,212,500 1,282,359, ,600,734 4,382,172,786 Total comprehensive income for the three months period ended 30 September ,067,649 86,067,649 Profit distribution for the year ended June 30, Re per certificate (175,500,000) (175,500,000) Transfer to statutory (mandatory) reserve ,033,825 (43,033,825) - Balance as at September 30, ,755,000,000 1,133,212,500 1,325,393,377 79,134,558 4,292,740,435 Balance as at June 30, ,755,000,000 1,133,212,500 1,463,126, ,251,794 4,658,591,219 Total comprehensive income for the three months period ended 30 September ,145, ,145,448 Profit distribution for the year ended June 30, Rs per certificate (263,250,000) (263,250,000) Transfer to statutory (mandatory) reserve Balance as at September 30, ,755,000,000 1,133,212,500 1,463,126, ,147,242 4,517,486,667 The annexed notes from 1 to 14 form an integral part of these condensed interim financial statements. Abdul Rahim Suriya Quarterly Report

13 Notes to the Condensed Interim Financial Information (Unaudited) For the three months period ended September 30, LEGAL STATUS AND NATURE OF BUSINESS 1.1 Allied Rental Modaraba was formed under the Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980 and the Rules framed thereunder and is managed by Allied Engineering Management Company (Private) Limited (the Modaraba Management Company ), which is a wholly owned subsidiary of Allied Engineering and Services (Private) Limited. The Modaraba Management Company is incorporated in Pakistan under the Companies Ordinance, 1984 and is registered with the Registrar of Modaraba Companies and Modarabas under the Modaraba Companies and Modaraba (Floatation and Control) Ordinance, The Securities and Exchange Commission of Pakistan (the SECP ), vide its certificate No. SC/M/RW/ ARM/ dated 10 May 2006, authorized Allied Engineering Management Company (Private) Limited to float Allied Rental Modaraba (the Modaraba). The Modaraba commenced its operations on 10 January The Modaraba is a perpetual Modaraba and is primarily engaged in rental / Ijarah and operation and maintenance of Caterpillar and other equipment (i.e. generators, forklifts, compactors, etc.). The registered office of the Modaraba is located at 21/3, Sector 22, Korangi Industrial Area, Karachi. The Modaraba is listed on the Pakistan Stock Exchange. 1.2 Effective from 10 January 2007, the Modaraba took over the rental business transactions and the related equipments of Allied Rental Services (Private) Limited (ARSL - an associated undertaking). The assets and liabilities acquired by the Modaraba comprise of certain fixed assets, the related lease liabilities. These were taken over under a prospectus floated by the Modaraba and approved by the SECP. 1.3 The JCR-VIS Credit Rating Company Limited has assigned long term A+ rating and short term A-1 rating to the Modaraba. 2. BASIS OF PRESENTATION 2.1 Statement of compliance These condensed interim financial information has been prepared in accordance with approved accounting standards as applicable in Pakistan for interim financial reporting. Approved accounting standards comprise of such International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board as are notified under the Companies Ordinance, 1984, Islamic Financial Accounting Standards (IFASs) issued by the Institute of Chartered Accountant of Pakistan, the requirements of the Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980, Modaraba Companies and Modaraba Rules, 1981 and directives issued by the Securities and Exchange Commission of Pakistan (SECP). Wherever the requirements of the Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980, IFASs, Modaraba Companies and Modaraba Rules, 1981 and directives issued by the SECP differ with the requirements of IFRSs, the requirements of the Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980, IFASs, Modaraba Companies and Modaraba Rules, 1981, or the directives issued by SECP shall prevail. 2.2 The disclosures made in these condensed interim financial information have, however, been limited based on the requirements of the International Accounting Standard 34: ' Interim Financial Reporting'. These condensed interim financial information does not include all the information required for a full set of financial statements and should be read in conjunction with the annual published financial statements of the Modaraba for the year ended 30 June The comparative balance sheet presented in these condensed interim financial information as at 30 June 2017 has been extracted from the audited financial statements of the Modaraba for the year ended 30 June 2017, whereas the comparative profit and loss account, statement of comprehensive income, the cash flow statement and statement of changes in equity for the three months period ended 30 September 2016 have been extracted from the unaudited condensed interim financial information for the period then ended. 12 Allied Rental Modaraba

14 2.4 Functional and presentation currency These condensed interim financial information is presented in Pakistani Rupees which is also the Modaraba's functional currency and all financial information presented has been rounded off to the nearest Rupee, unless otherwise stated. 3. ACCOUNTING POLICIES 3.1 The accounting policies and methods of computation adopted in the preparation of these condensed interim financial information are the same as those applied in the preparation of the published financial statements as at and for the year ended 30 June However during the period, the Modaraba adopted the accounting policies as follows: 3.2 Intangible assets Intangible assets having a finite useful life are stated at cost less accumulated amortization and accumulated impairment losses, if any. Subsequent costs are included in the assets' carrying amounts or recognized as separate assets, as appropriate, only where it is probable that the future economic benefits associated with the assets will flow to the Modaraba and the cost of the items can be measured reliably. Amortization is charged to income using the straight line method. The useful lives and amortization method are reviewed and adjusted, as appropriate, at each reporting date. Amortization is charged from the month the asset is available for use while in the case of assets disposed of, it is charged till the month preceding the month of disposal. Intangible assets having an indefinite useful life are stated at cost less accumulated impairment losses, if any. Gain or loss on disposal of intangible assets, if any, is taken to the profit and loss account in the period in which these arise. 3.3 Revenue recognition on Diminishing Musharaka Profit on Diminishing Musharaka arrangements is recognized under the effective profit rate method based on the outstanding amount. 3.4 Amendment and interpretation to approved accounting standards effective During the period certain amendments and interpretation to approved accounting standards became effective. However, these are either not relevant to the Modaraba's operation and/or do not have any impact on the accounting policies of the Modaraba. 4. ESTIMATES AND JUDGMENTS The preparation of condensed interim financial information requires management to make judgments, estimates and assumption that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates. The significant judgments made by management in applying the accounting policies and the key sources of estimation and uncertainty those are the same as those that applied to the financial statements as at and for the year ended 30 June FINANCIAL RISK MANAGEMENT The Modaraba's financial risk management objectives and polices are consistent with those disclosed in the audited financial statements as at and for the year ended 30 June Quarterly Report

15 6. IJARAH ASSETS (Unaudited) September 30, 2017 Generators, material handling / transportation Machines Total vehicles and related equipment At July 01, 2017 Cost 8,571,584, ,980,227 9,389,564,869 Accumulated depreciation (3,236,248,485) (93,651,657) (3,329,900,142) Net book value 5,335,336, ,328,570 6,059,664,727 Additions 272,990, ,217, ,207,945 Disposals Cost Depreciation Depreciation charge for the period (166,409,796) (16,125,473) (182,535,269) Closing net book value 5,441,916, ,420,944 6,316,337,403 At Sep 30, 2017 Cost 8,844,574, ,198,074 9,828,772,814 Accumulated depreciation (3,402,658,281) (109,777,130) (3,512,435,411) Net book value 5,441,916, ,420,944 6,316,337,403 Life (Years) 1 to 28 4 to 10 (Audited) June 30, 2017 Generators, material handling / transportation Machines Total vehicles and related equipment At July 01, 2017 Cost 8,147,104, ,400,318 8,510,504,632 Accumulated depreciation (2,724,722,965) (59,582,490) (2,784,305,455) Net book value 5,422,381, ,817,828 5,726,199,177 Additions 824,976, ,831,471 1,295,808,076 Disposals Cost (400,496,277) (16,251,562) (416,747,839) Depreciation 234,648,840 5,920, ,569,109 (165,847,437) (10,331,293) (176,178,730) Depreciation charge for the period (746,174,360) (39,989,436) (786,163,796) Closing net book value 5,335,336, ,328,570 6,059,664,727 At Sep 30, 2017 Cost 8,571,584, ,980,227 9,389,564,869 Accumulated depreciation (3,236,248,485) (93,651,657) (3,329,900,142) Net book value 5,335,336, ,328,570 6,059,664,727 Life (Years) 1 to 28 4 to Allied Rental Modaraba

16 7. DIMINISHING MUSHARAKAH FINANCING PAYABLE - SECURED Unaudited Audited Sep 30, 2017 Jun 30, 2017 Musharakah financing 3,228,863,820 2,837,804,499 Due within one year (973,088,952) (794,791,146) 2,255,774,868 2,043,013, Financing from banking and financial institutions 3,053,277,376 2,654,054,352 Financing from modarabas 175,586, ,750,147 3,228,863,820 2,837,804,499 8 CONTINGENCIES AND COMMITMENTS 8.1 Contingencies Contingencies outstanding as at September 30, 2017 are as follows: Sindh Sales Tax On operations & maintenance services of the Modaraba. During the year ended June 30, 2014, the Assistant Commissioner - Sindh Revenue Board (SRB) issued an order no. 160 of 2013 dated July 12, 2013 demanding Sindh Sales Tax of Rs % on total Operation & Maintenance income of the modaraba of Rs million for the year ended June 30, Considering the nature of Operation & Maintenance Services, their geographical limitations and method of computation relating to levy of provincial Sales Tax on services as envisaged in the Sindh Sales Tax on Services Act 2011, the Modaraba filed an appeal with the Commissioner Appeals - Sindh Revenue Board (SRB). Simultaneously, the Modaraba also filed a Constitutional petition in the Honorable High Court of Sindh relating to the levy of Sindh Sales Tax by virtue of which the Honorable High Court of Sindh kindly stayed the demand of Sindh Sales Tax vide its order dated October 11, However, subsequently the Honorable High Court of Sindh issued a judgment dated January 27, 2014 directing SRB not to take any coercive action against Allied Rental Modaraba, till the decision has been reached in Appeal which was pending before the Commissioner Appeals - Sindh Revenue Board (SRB) The Commissioner Appeals- Sindh Revenue Board (SRB) vide his order in appeal number 16/2014 dated February 25, 2014 reduced the demand of Sindh Sales Tax from Rs million to Rs million stating that the differential amount of Rs million pertains to the services rendered outside the province of Sindh. The Modaraba has filed a Constitutional Petition CP No. D-1190 in the Honorable High Court of Sindh against the order of the Commissioner Appeals - Sindh Revenue Board (SRB) by virtue of which the Honorable High Court of Sindh vide its order dated March 11, 2014 has suspended the operation of the impugned order of the Commissioner Appeals - SRB. Subsequently, the Sindh Revenue Board Tribunal has been constituted and has become functional in June The Modaraba, on direction of the Honorable High Court of Sindh, has filed an appeal to the tribunal the outcome of which is pending. The Management believes that the outcome of the appeal will be in favour of the Modaraba and hence no provision has been made in these financial statements Federal Excise Duty on gross revenue receipts of the Modaraba On March 1, 2016, assessment orders relating to tax years 2014 and 2015 were received from the Assistant Commissioner of Inland Revenue demanding Federal Excise Duty (FED) aggregating to Rs million of gross receipts of the Modaraba for the above mentioned tax years) and the related default surcharge and applicable penalty. In response, an appeal was filed by the Modaraba with the Commissioner Inland Revenue Appeals (CIR-A) on March 16, An under protest payment of Rs 50 million was also made by the Modaraba to the Federal Board of Revenue in respect of the above. Quarterly Report

17 In the opinion of the management pursuant to the 18th amendment in the Constitution of Pakistan, the authority to collect sales tax has been delegated to the provinces. Accordingly, the Modaraba filed Constitutional Petitions with the Honorable Sindh High Court (SHC) in respect of which the SHC granted an interim injunction order to the Modaraba. The petitions were decided by the SHC on June 2, 2016 in which the SHC declared the levy of FED as ultra vires with effect from July 1, 2011 and also quashed any duty recovered by the FBR. However, in contradiction to the above mentioned judgment by the SHC, the CIR-A through orders dated June 3, 2016 upheld the levy of FED on the Modaraba and consequently directed the Modaraba to pay the alleged amount of FED along with default surcharge and penalty. In response the Modaraba has filed appeals with the Honorable Appellate Tribunal Inland Revenue (ATIR) which is pending hearing. parties aggrieved by the above mentioned order of SHC which is pending hearing. In light of the judgment of the SHC and based on consultations with its tax advisors the management believes that the outcome of the appeals filed with the ATIR and Supreme Court of Pakistan will be in favour of the Modaraba. Accordingly, no provision in respect of FED has been made in these financial statements. Further, the under protest payment of Rs 50 million made to the FBR has been shown as a refundable balance. 8.2 Commitments Contractual rentals receivable on Ijarah contracts Due within one year (Unaudited) September 30, 2017 Due after one year but within five years Due after five years Total Due within one year (Audited) June 30, 2017 Due after one year but within five years Due after five years Total Rentals receivable in future 48,821,523 78,146, ,968,095 96,561,512 59,353, ,914, Ijarah rentals payable This represents the rentals receivable by the Modaraba in future periods in respect of Ijarah assets given under long-term arrangements. (Unaudited) September 30, 2017 Due within one year Due after one year but within five years Total Due within one year (Audited) June 30, 2017 Due after one year but within five years Total Future Ijarah rentals payables , , Commitments in respect of outstanding letter of credit and registered import contracts amount to Rs. Nill (Sep 2016: Rs ). 9 OPERATING EXPENSES Three months period ended Sep 30, 2017 Jun 30, 2017 Salaries, wages and other staff benefits 201,455, ,938,411 Depreciation expense 182,535, ,688,912 Fleet vehicles running cost 100,355,230 72,725,749 Repairs and maintenance cost 88,167,770 66,721,689 Ijarah rentals 9,934,771 27,749,526 Vehicles running cost 4,752,110 4,956,436 Insurance cost - equipments 8,874,489 7,437,282 Travelling and conveyance 2,517,438 5,344,520 Rent expense 5,070,116 2,778, ,662, ,340, Allied Rental Modaraba

18 10 ADMINISTRATIVE AND DISTRIBUTION EXPENSES Three months period ended Sep 30, 2017 Sep 30, 2016 Salaries, wages and other staff benefits 26,344,474 17,565,787 Vehicle running costs 2,546,180 1,055,486 Travelling and conveyance 1,359,510 1,643,986 Depreciation expense 3,690,339 3,143,296 Legal and professional charges 2,667,982 3,434,832 Telephone, postage and fax charges 1,433, ,127 Advertisement and sales promotion 412,279 83,743 Printing and stationery 1,142, ,773 Insurance cost - vehicles 493, ,210 Training, meetings and tender participation 504, ,952 Donation - 325,000 Software Development 479, ,317 Entertainment 1,068,885 1,016,481 Utilities 867,168 1,216,565 Security 855, ,300 Miscellaneous 219,353 1,291,939 44,085,764 33,754, FINANCE COSTS Three months period ended Sep 30, 2017 Sep 30, 2016 Financial cost on Diminishing Musharakah financing 55,177,521 34,661,239 Exchange loss / (Profit) (462,754) 665,385 Bank charges and commission 1,400, ,774 56,115,218 35,731, TAXATION 12.1 The income of non-trading Modarabas is exempt from tax provided that not less than ninety percent of their profits for the year as reduced by the amount transferred to statutory (mandatory) reserves are distributed to the certificate holders. As the Management Company of the Modaraba, subsequent to the year end, has approved the required distribution as stated above, no provision for taxation has been made in these financial statements The income tax returns of the Modaraba have been filed upto the financial year ended June 30, 2016 which are deemed assessed under the Income Tax Ordinance 2001, unless selected for audit by the taxation authorities. 13 RELATED PARTY TRANSACTIONS The related parties comprise of major certificate holders and their close family members, directors of the Modaraba Management Company and their close family members, key management personnel of the Modaraba Management Company, Key Management personnel of the Modaraba and their close family members, the provident fund trust and the entities with common directors or under common management and control. Contribution to the provident fund is made in accordance with the services rules. Modaraba management fee, if any, is accrued in accordance with the requirements of the Modaraba Regulations. Remuneration of key management personnel are in accordance with the terms of their employment. Other transactions are carried out at agreed terms. Quarterly Report

19 Details of transactions with related parties during the period are as follows: Allied Engineering Management Company (Private) Limited (Modaraba Management Company) Modaraba Management Company's remuneration - - Allied Engineering and Services (Private) Limited (holding company of the Modaraba Management Company) Purchase of assets 34,151,819 32,266,495 Purchase of parts and services 70,548,060 68,562,436 Rental revenue 1,276, ,400 Allied Engineering and Services (Private) Limited - Staff Provident Fund Three months period ended Sep 30, 2017 Sep 30, 2016 Contribution to the staff provident fund 2,653,657 2,181,345 Unaudited Audited Sep 30, 2017 Jun 30, 2017 Allied Engineering Management Company (Private) Limited (Modaraba Management Company) Outstanding certificates 35,100,000 (June 30, 2017: 35,100,000) 351,000, ,000,000 Payable to the Modaraba Management Company 14,014,345 13,982,571 Allied Engineering and Services (Private) Limited (the holding company of the Modaraba Management Company) Outstanding certificates 100,146,412 (June 30, 2017: 85,146,412) 1,001,464, ,464,120 Payable against purchase of parts and services 343,305, ,889,781 Allied Engineering and Services (Private) Limited - Staff Provident Fund Outstanding certificates 2,979,407 (June 30, 2017: 2,979,407) 29,797,070 29,797, Allied Rental Modaraba

20 14 DATE OF AUTHORISATION These financial statements were authorised in the meeting of the Board of Directors of the Management Company held on October 27, Abdul Rahim Suriya Quarterly Report

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