Allied sep 2014arm.com.pk/uploads/files/pdf/Quarterly_Report_September_2014.pdf · The Board of Directors of Allied Engineering Management Company (Private) Limited, the management

Contents

• Modaraba Information 01

• Directors’ Report 02

• Condensed Interim Balance Sheet (Unaudited) 03

• Condensed Interim Profit & Loss Account (Unaudited) 04

• Condensed Interim Statement of Comprehensive Income (Unaudited) 05

• Condensed Interim Cash Flow Statement (Unaudited) 06

• Condensed Interim Statement of Changes in Equity (Unaudited) 07

• Notes to and forming part of the Condensed Interim Financial Statements (Unaudited) 08

Modaraba Information

Quarterly Report September 2014 [ ]01

Contents

• Modaraba Information 01

• Directors’ Report 02

• Condensed Interim Balance Sheet (Unaudited) 03

• Condensed Interim Profit & Loss Account (Unaudited) 04

• Condensed Interim Statement of Comprehensive Income (Unaudited) 05

• Condensed Interim Cash Flow Statement (Unaudited) 06

• Condensed Interim Statement of Changes in Equity (Unaudited) 07

• Notes to and forming part of the Condensed Interim Financial Statements (Unaudited) 08

Modaraba Information

Quarterly Report September 2014 [ ]01

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, 2014.

Review of Operations

During the period under review the Modaraba’s revenue from Ijarah rentals increased by Rs. 124 million, 21% higher than the Ijarah rentals for the corresponding quarter last year. The growth is attributable to all sectors of the Rental business including Power Generation and Logistics segment. This growth has come mainly on account of continued expansion of its rental fleet. The customer base of the Modaraba, consist of a good mix of multinational, large and medium sized local corporate and selective SME clientele.

However, compared to Sales Growth, the operating expense for the period significantly went up by Rs.142 Million (40 %) to Rs. 499 Million compared to Rs. 357 Million. This is mainly due to increase in Depreciation Expense by Rs. 81 Million and Ijarah rental charges by Rs 28 Million. This as mentioned above is mainly on account of Rs Two Billion plus investment in the Rental fleet from October 2013 to September 2014.

Administrative and distribution expenses increased by Rs. 2 million to Rs. 22 million (2013: Rs. 20 million) in line with inflation despite austerity measures being taken. Financial charges also went up substantially to Rs. 56 million compared from Rs. 41 million in the corresponding period last year.

Your Modaraba, while remaining cautious and prudent during the prevailing economic slowdown, is focused to take benefit of opportunities available in the market. Our proactive risk management approach has helped us to maintain a stable position in NBFI and Modaraba sector. 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.

DIRECTORS’ REPORT

October 22, 2014

On Behalf of the Board

Murtaza Ahmed AliChief Executive

For the three months period ended September 30, 2014

Financial Highlights

Rs in ‘000

Revenue from operations 728,545Profit for the period 150,310

Net profit margin 21%Earning per certificate Rs. 1.23

Investment in Rental Fleet 4,937,387

For Allied Engineering Management Company (Private) Limited (Modaraba Management Company)

Murtaza Ahmed Ali Khwaja Asif Rahman Syed Feisal Ali Chief Executive Chairman Director

Condensed Interim Balance Sheet (Unaudited)AS AT SEPTEMBER 30, 2014

Unaudited AuditedNote Sep 30, 2014 Jun 30, 2014

ASSETS

Current assetsCash and bank balances 133,345,589 48,027,231Ijarah rentals receivable 346,478,001 305,483,559Operation and maintenance income receivable 19,615,110 21,557,025Advances, deposits and other receivables 59,997,395 54,210,173Spare parts 43,601,943 47,229,267

603,038,038 476,507,255Non-current assetsLong-term security deposits 70,359,926 70,359,926Fixed assets in own use - tangible 63,249,886 65,032,652Ijarah assets 6 4,937,387,439 4,644,854,276Capital work-in-progress 127,870,860 99,882,793

5,198,868,111 4,880,129,647

Total assets 5,801,906,149 5,356,636,902

LIABILITIES

Current liabilitiesCreditors, accrued and other liabilities 589,259,501 419,114,365Dividend Payable 366,246,148 621,148Payable to the Modaraba Management Company 1,851,861 7,057,997Current portion of diminishing musharakah financing payable - secured 7 846,926,405 804,727,207Current portion of security deposits 24,000,000 24,000,000

1,828,283,915 1,255,520,717

Non-current liabilitiesDiminishing musharakah financing payable - secured 7 1,012,284,355 924,463,183Deferred liability 24,730,674 24,730,674Other long-term employee benefit 7,227,702 7,227,702Security deposits 26,000,000 26,000,000

1,070,242,731 982,421,559

Total liabilities 2,898,526,646 2,237,942,276

NET ASSETS 2,903,379,503 3,118,694,626

FINANCED BY : CAPITAL AND RESERVESAuthorised certificate capital 150,000,000 modaraba certificates of Rs.10 each 1,500,000,000 1,500,000,000

Issued, subscribed and paid-up certificate capital 1,218,750,000 1,218,750,000Premium on issue of right certificates 439,500,000 439,500,000Statutory (mandatory) reserve 1,153,535,590 1,078,380,652Unappropriated profit 91,593,913 382,063,974

2,903,379,503 3,118,694,626

CONTINGENCIES AND COMMITMENTS 8

The annexed notes from 1 to 14 form an integral part of these condensed interim financial statements.

Quarterly Report September 2014 [ ]03Quarterly Report September 2014[ ]02

(Rupees)

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, 2014.

Review of Operations

During the period under review the Modaraba’s revenue from Ijarah rentals increased by Rs. 124 million, 21% higher than the Ijarah rentals for the corresponding quarter last year. The growth is attributable to all sectors of the Rental business including Power Generation and Logistics segment. This growth has come mainly on account of continued expansion of its rental fleet. The customer base of the Modaraba, consist of a good mix of multinational, large and medium sized local corporate and selective SME clientele.

However, compared to Sales Growth, the operating expense for the period significantly went up by Rs.142 Million (40 %) to Rs. 499 Million compared to Rs. 357 Million. This is mainly due to increase in Depreciation Expense by Rs. 81 Million and Ijarah rental charges by Rs 28 Million. This as mentioned above is mainly on account of Rs Two Billion plus investment in the Rental fleet from October 2013 to September 2014.

Administrative and distribution expenses increased by Rs. 2 million to Rs. 22 million (2013: Rs. 20 million) in line with inflation despite austerity measures being taken. Financial charges also went up substantially to Rs. 56 million compared from Rs. 41 million in the corresponding period last year.

Your Modaraba, while remaining cautious and prudent during the prevailing economic slowdown, is focused to take benefit of opportunities available in the market. Our proactive risk management approach has helped us to maintain a stable position in NBFI and Modaraba sector. 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.

DIRECTORS’ REPORT

October 22, 2014

On Behalf of the Board

Murtaza Ahmed AliChief Executive

For the three months period ended September 30, 2014

Financial Highlights

Rs in ‘000

Revenue from operations 728,545Profit for the period 150,310

Net profit margin 21%Earning per certificate Rs. 1.23

Investment in Rental Fleet 4,937,387

For Allied Engineering Management Company (Private) Limited (Modaraba Management Company)


Condensed Interim Balance Sheet (Unaudited)AS AT SEPTEMBER 30, 2014

Unaudited AuditedNote Sep 30, 2014 Jun 30, 2014

ASSETS

Current assetsCash and bank balances 133,345,589 48,027,231Ijarah rentals receivable 346,478,001 305,483,559Operation and maintenance income receivable 19,615,110 21,557,025Advances, deposits and other receivables 59,997,395 54,210,173Spare parts 43,601,943 47,229,267

603,038,038 476,507,255Non-current assetsLong-term security deposits 70,359,926 70,359,926Fixed assets in own use - tangible 63,249,886 65,032,652Ijarah assets 6 4,937,387,439 4,644,854,276Capital work-in-progress 127,870,860 99,882,793

5,198,868,111 4,880,129,647

Total assets 5,801,906,149 5,356,636,902

LIABILITIES

Current liabilitiesCreditors, accrued and other liabilities 589,259,501 419,114,365Dividend Payable 366,246,148 621,148Payable to the Modaraba Management Company 1,851,861 7,057,997Current portion of diminishing musharakah financing payable - secured 7 846,926,405 804,727,207Current portion of security deposits 24,000,000 24,000,000

1,828,283,915 1,255,520,717

Non-current liabilitiesDiminishing musharakah financing payable - secured 7 1,012,284,355 924,463,183Deferred liability 24,730,674 24,730,674Other long-term employee benefit 7,227,702 7,227,702Security deposits 26,000,000 26,000,000

1,070,242,731 982,421,559

Total liabilities 2,898,526,646 2,237,942,276

NET ASSETS 2,903,379,503 3,118,694,626

FINANCED BY : CAPITAL AND RESERVESAuthorised certificate capital 150,000,000 modaraba certificates of Rs.10 each 1,500,000,000 1,500,000,000

Issued, subscribed and paid-up certificate capital 1,218,750,000 1,218,750,000Premium on issue of right certificates 439,500,000 439,500,000Statutory (mandatory) reserve 1,153,535,590 1,078,380,652Unappropriated profit 91,593,913 382,063,974

2,903,379,503 3,118,694,626

CONTINGENCIES AND COMMITMENTS 8



(Rupees)

For Allied Engineering Management Company (Private) Limited


Condensed Interim Profit and Loss Account (Unaudited)For the three months period ended September 30, 2014

NoteSep 30, 2014 Sep 30, 2013

Ijarah rentals 706,152,751 581,724,238Operation and maintenance income 22,392,094 18,355,767

728,544,845 600,080,005Operating expenses 9 (498,632,799) (357,098,725)

Gross Profit 229,912,046 242,981,280

Administrative and distribution expenses 10 (22,070,590) (19,705,813)Provision against potential Ijarah losses and operation and

maintenance income - -Finance costs 11 (56,335,959) (41,421,537)Other income 1,871,928 17,213,182

(76,534,621) (43,914,168)153,377,425 199,067,112

Modaraba Management Company's remuneration - -Sindh Sales Tax on Management Company's remuneration - -

153,377,425 199,067,112Workers' welfare fund (3,067,548) (3,981,342)

Profit for the year before taxation 150,309,877 195,085,770Taxation 12 - -

Profit for the year after taxation 150,309,877 195,085,770

Earnings per certificate - basic & diluted 1.23 1.60


(Rupees)

Three months period ended



Condensed Interim Statement of Comprehensive Income (Unaudited)For the three months period ended September 30, 2014

Sep 30, 2014 Sep 30, 2013

Profit for the period after taxation 150,309,877 195,085,770

Other comprehensive income for the period - -

Total comprehensive income for the period 150,309,877 195,085,770


(Rupees)



(Modaraba Management Company) (Modaraba Management Company)



Condensed Interim Profit and Loss Account (Unaudited)For the three months period ended September 30, 2014

NoteSep 30, 2014 Sep 30, 2013

Ijarah rentals 706,152,751 581,724,238Operation and maintenance income 22,392,094 18,355,767

728,544,845 600,080,005Operating expenses 9 (498,632,799) (357,098,725)

Gross Profit 229,912,046 242,981,280

Administrative and distribution expenses 10 (22,070,590) (19,705,813)Provision against potential Ijarah losses and operation and

maintenance income - -Finance costs 11 (56,335,959) (41,421,537)Other income 1,871,928 17,213,182

(76,534,621) (43,914,168)153,377,425 199,067,112

Modaraba Management Company's remuneration - -Sindh Sales Tax on Management Company's remuneration - -

153,377,425 199,067,112Workers' welfare fund (3,067,548) (3,981,342)

Profit for the year before taxation 150,309,877 195,085,770Taxation 12 - -

Profit for the year after taxation 150,309,877 195,085,770

Earnings per certificate - basic & diluted 1.23 1.60


(Rupees)




Condensed Interim Statement of Comprehensive Income (Unaudited)For the three months period ended September 30, 2014

Sep 30, 2014 Sep 30, 2013

Profit for the period after taxation 150,309,877 195,085,770

Other comprehensive income for the period - -

Total comprehensive income for the period 150,309,877 195,085,770


(Rupees)






Condensed Interim Cash Flow Statement (Unaudited)For the three months period ended September 30, 2014

Sep 30, 2014 Sep 30, 2013

CASH FLOWS FROM OPERATING ACTIVITIESProfit for the period 150,309,877 195,085,770

Adjustments for non-cash charges and other items:Depreciation 188,730,840 107,599,540Financial charges including bank charges 56,335,959 41,421,537Loss/(Profit) on disposal of Ijarah assets 1,264,859 (10,944,675)

396,641,535 333,162,172(Increase) / decrease in assets

Ijarah rentals receivable (40,994,442) 68,108,183Operation and maintenance income receivable 1,941,915 100,281Advances, deposits and other receivable (5,787,222) 11,537,147Spare parts 3,627,324 (1,649,866)Long-term security deposits - (2,983,937)

(41,212,425) 75,111,808Increase / (decrease) in liabilities

Creditors, accrued and other liabilities (excluding accrued financial charges) 165,715,704 (426,133,307)Payable to the Modaraba Management Company (5,206,136) (214,263)Security Deposits - (17,500,000)

160,509,568 (443,847,570)Cash generated from / (utilised in) operations 119,297,143 (368,735,762)

Gratuity paid - (192,695)Compensated absence paid - (53,067)Financial charges paid (51,906,527) (31,127,951)Net cash flows from operating activities 464,032,151 (66,947,303)

CASH FLOWS FROM INVESTING ACTIVITIESFixed capital expenditure (519,686,190) (191,534,131)Proceeds from disposal of Ijarah assets 10,952,027 66,184,000Net cash flows from investing activities (508,734,163) (125,350,131)

CASH FLOWS FROM FINANCING ACTIVITIES

Diminishing Musharakah financing availed 346,304,595 315,245,459Repayment of Diminishing Musharakah financing (216,284,225) (108,449,594)Net cash flows from financing activities 130,020,370 206,795,865

Net increase in cash and cash equivalents 85,318,358 14,498,431

Cash and cash equivalents at the beginning of the year 48,027,231 205,048,935

133,345,589 219,547,366



(Rupees)



Condensed Interim Statement of Changes in Equity (Unaudited)For the three months period ended September 30, 2014

Balance as at June 30, 2013 975,000,000 225,000,000 801,402,963 351,326,776 2,352,729,739

Total comprehensive income for the three months period ended 30 September 2013 - - - 195,085,770 195,085,770

Profit distribution for the year ended - - - (292,500,000) (292,500,000)June 30, 2013 @ Rs. 3.00 per certificate

Transfer to statutory (mandatory) reserve - - 97,542,885 (97,542,885) -

Balance as at September 30, 2013 975,000,000 225,000,000 898,945,848 156,369,661 2,255,315,509

Balance as at June 30, 2014 1,218,750,000 439,500,000 1,078,380,652 382,063,974 3,118,694,626


Profit distribution for the year endedJune 30, 2014 @ Rs. 3.00 per certificate - - - (365,625,000) (365,625,000)


Balance as at September 30, 2014 1,218,750,000 439,500,000 1,153,535,590 91,593,913 2,903,379,503


(Rupees)

Un-appropriated

profitTotal

Premium on issue of

certificates

Paid up certificate

capital

Statutory (mandatory)

reserve





Condensed Interim Cash Flow Statement (Unaudited)For the three months period ended September 30, 2014

Sep 30, 2014 Sep 30, 2013

CASH FLOWS FROM OPERATING ACTIVITIESProfit for the period 150,309,877 195,085,770

Adjustments for non-cash charges and other items:Depreciation 188,730,840 107,599,540Financial charges including bank charges 56,335,959 41,421,537Loss/(Profit) on disposal of Ijarah assets 1,264,859 (10,944,675)

396,641,535 333,162,172(Increase) / decrease in assets

Ijarah rentals receivable (40,994,442) 68,108,183Operation and maintenance income receivable 1,941,915 100,281Advances, deposits and other receivable (5,787,222) 11,537,147Spare parts 3,627,324 (1,649,866)Long-term security deposits - (2,983,937)

(41,212,425) 75,111,808Increase / (decrease) in liabilities

Creditors, accrued and other liabilities (excluding accrued financial charges) 165,715,704 (426,133,307)Payable to the Modaraba Management Company (5,206,136) (214,263)Security Deposits - (17,500,000)

160,509,568 (443,847,570)Cash generated from / (utilised in) operations 119,297,143 (368,735,762)

Gratuity paid - (192,695)Compensated absence paid - (53,067)Financial charges paid (51,906,527) (31,127,951)Net cash flows from operating activities 464,032,151 (66,947,303)

CASH FLOWS FROM INVESTING ACTIVITIESFixed capital expenditure (519,686,190) (191,534,131)Proceeds from disposal of Ijarah assets 10,952,027 66,184,000Net cash flows from investing activities (508,734,163) (125,350,131)

CASH FLOWS FROM FINANCING ACTIVITIES

Diminishing Musharakah financing availed 346,304,595 315,245,459Repayment of Diminishing Musharakah financing (216,284,225) (108,449,594)Net cash flows from financing activities 130,020,370 206,795,865

Net increase in cash and cash equivalents 85,318,358 14,498,431

Cash and cash equivalents at the beginning of the year 48,027,231 205,048,935

133,345,589 219,547,366



(Rupees)



Condensed Interim Statement of Changes in Equity (Unaudited)For the three months period ended September 30, 2014

Balance as at June 30, 2013 975,000,000 225,000,000 801,402,963 351,326,776 2,352,729,739


Profit distribution for the year ended - - - (292,500,000) (292,500,000)June 30, 2013 @ Rs. 3.00 per certificate


Balance as at September 30, 2013 975,000,000 225,000,000 898,945,848 156,369,661 2,255,315,509

Balance as at June 30, 2014 1,218,750,000 439,500,000 1,078,380,652 382,063,974 3,118,694,626


Profit distribution for the year endedJune 30, 2014 @ Rs. 3.00 per certificate - - - (365,625,000) (365,625,000)


Balance as at September 30, 2014 1,218,750,000 439,500,000 1,153,535,590 91,593,913 2,903,379,503


(Rupees)

Un-appropriated

profitTotal

Premium on issue of

certificates

Paid up certificate

capital

Statutory (mandatory)

reserve



Notes to and forming part of the Condensed Interim Financial Statements (Unaudited)For the three months period ended September 30, 2014

1 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 there under and is managed by the 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, 1980.

The Securities and Exchange Commission of Pakistan (the 'SECP'), vide its certificate No. SC/M/RW/ARM/2006-166 dated May 10, 2006, authorised Allied Engineering Management Company (Private) Limited to float Allied Rental Modaraba (the 'Modaraba').

The Modaraba is a perpetual Modaraba and is primarily engaged in rental / Ijarah / leasing 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 Karachi Stock Exchange. The Modaraba commenced its operations on January 10, 2007.

1.2 Effective from January 10, 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.

2 BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of Preparation

2.1.1 Statement of compliance

These financial statements have been prepared in accordance with the approved accounting standards as applicable in Pakistan. Approved accounting standards comprise of such International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board as are notified under the Companies Ordinance, 1984, Islamic Financial Accounting Standards (IFAS) issued by the Institute of Chartered Accountants 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 SECP. Wherever the requirements of the Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980, IFAS, Modaraba Companies and Modaraba Rules, 1981 and directives issued by the SECP differ with the requirements of the IFRS, the requirements of the Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980, IFAS, Modaraba Companies and Modaraba Rules, 1981 or the directives issued by the SECP prevail.

2.1.2 The disclosures made in this condensed interim financial information have, however, been limited based on the requirements of the International Accounting Standard 34: ' Interim Financial Reporting'. This condensed interim financial information has been prepared in accordance with approved accounting standards as applicable in Pakistan for Interim financial reporting. This 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 published financial statements of the Modaraba for the year ended June 30, 2014.

2.1.3 This condensed interim financial information is unaudited.

2.2 Functional and presentation currency

These financial statements are presented in Pakistani Rupees which is the functional and presentational currency of the Modaraba. All information presented has been rounded off to the nearest Rupee.

3 SIGNIFICANT ACCOUNTING POLICIES

The accounting policies adopted by the Modaraba in the preparation of these interim financial statements are consistent with those applied for the preparation of preceding audited published financial statements for the year ended June 30, 2014.

4 ESTIMATES

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.

In preparing these condensed interim financial information, the significant judgments made by management in applying the accounting policies and the key sources of estimation uncertainty were the same as those that applied to the financial statements as at and for the year ended June 30, 2014.

5 FINANCIAL RISK MANAGEMENT

The Modaraba's financial risk management objectives and polices are consistent with that disclosed in the financial statements as at and for the year ended June 30, 2014.

6 IJARAH ASSETS

At July 01, 2014Cost 5,949,113,947 228,816,760 6,177,930,707Accumulated depreciation (1,475,976,531) (57,099,900) (1,533,076,431)Net book value 4,473,137,416 171,716,860 4,644,854,276

Additions 490,987,197 175,000 491,162,197

DisposalsCost (1,871,600) (14,515,023) (16,386,623)Depreciation 902,262 3,267,475 4,169,737

(969,338) (11,247,548) (12,216,886)Depreciation charge for the period (183,405,656) (3,006,492) (186,412,148)Closing net book value 4,779,749,619 157,637,820 4,937,387,439

At Sep 30, 2014Cost 6,438,229,544 214,476,737 6,652,706,281Accumulated depreciation (1,658,479,925) (56,838,917) (1,715,318,842)Net book value 4,779,749,619 157,637,820 4,937,387,439

Life (Years) 1 to 9 4 to 7

(Unaudited) September 30, 2014

Generators, forklifts and Machines Total

Audited June 30, 2014

Generators, forklifts and related parts

Machines Total

(Rupees)


Additions 1,661,344,635 36,302,935 1,697,647,570

DisposalsCost (253,683,734) - (253,683,734)Depreciation 126,157,070 - 126,157,070

(127,526,664) - (127,526,664)Depreciation charge for the period (590,155,117) (12,654,690) (602,809,807)Closing net book value 4,473,137,416 171,716,860 4,644,854,276

At Jun 30, 2014Cost 5,949,113,947 228,816,760 6,177,930,707Accumulated depreciation (1,475,976,531) (57,099,900) (1,533,076,431)Net book value 4,473,137,416 171,716,860 4,644,854,276


related parts

(Rupees)


Notes to and forming part of the Condensed Interim Financial Statements (Unaudited)For the three months period ended September 30, 2014

1 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 there under and is managed by the 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, 1980.

The Securities and Exchange Commission of Pakistan (the 'SECP'), vide its certificate No. SC/M/RW/ARM/2006-166 dated May 10, 2006, authorised Allied Engineering Management Company (Private) Limited to float Allied Rental Modaraba (the 'Modaraba').

The Modaraba is a perpetual Modaraba and is primarily engaged in rental / Ijarah / leasing 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 Karachi Stock Exchange. The Modaraba commenced its operations on January 10, 2007.

1.2 Effective from January 10, 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.

2 BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of Preparation

2.1.1 Statement of compliance

These financial statements have been prepared in accordance with the approved accounting standards as applicable in Pakistan. Approved accounting standards comprise of such International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board as are notified under the Companies Ordinance, 1984, Islamic Financial Accounting Standards (IFAS) issued by the Institute of Chartered Accountants 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 SECP. Wherever the requirements of the Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980, IFAS, Modaraba Companies and Modaraba Rules, 1981 and directives issued by the SECP differ with the requirements of the IFRS, the requirements of the Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980, IFAS, Modaraba Companies and Modaraba Rules, 1981 or the directives issued by the SECP prevail.

2.1.2 The disclosures made in this condensed interim financial information have, however, been limited based on the requirements of the International Accounting Standard 34: ' Interim Financial Reporting'. This condensed interim financial information has been prepared in accordance with approved accounting standards as applicable in Pakistan for Interim financial reporting. This 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 published financial statements of the Modaraba for the year ended June 30, 2014.

2.1.3 This condensed interim financial information is unaudited.

2.2 Functional and presentation currency

These financial statements are presented in Pakistani Rupees which is the functional and presentational currency of the Modaraba. All information presented has been rounded off to the nearest Rupee.

3 SIGNIFICANT ACCOUNTING POLICIES

The accounting policies adopted by the Modaraba in the preparation of these interim financial statements are consistent with those applied for the preparation of preceding audited published financial statements for the year ended June 30, 2014.

4 ESTIMATES

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.

In preparing these condensed interim financial information, the significant judgments made by management in applying the accounting policies and the key sources of estimation uncertainty were the same as those that applied to the financial statements as at and for the year ended June 30, 2014.

5 FINANCIAL RISK MANAGEMENT

The Modaraba's financial risk management objectives and polices are consistent with that disclosed in the financial statements as at and for the year ended June 30, 2014.

6 IJARAH ASSETS


Additions 490,987,197 175,000 491,162,197

DisposalsCost (1,871,600) (14,515,023) (16,386,623)Depreciation 902,262 3,267,475 4,169,737

(969,338) (11,247,548) (12,216,886)Depreciation charge for the period (183,405,656) (3,006,492) (186,412,148)Closing net book value 4,779,749,619 157,637,820 4,937,387,439

At Sep 30, 2014Cost 6,438,229,544 214,476,737 6,652,706,281Accumulated depreciation (1,658,479,925) (56,838,917) (1,715,318,842)Net book value 4,779,749,619 157,637,820 4,937,387,439



Generators, forklifts and Machines Total

Audited June 30, 2014

Generators, forklifts and related parts

Machines Total

(Rupees)


Additions 1,661,344,635 36,302,935 1,697,647,570

DisposalsCost (253,683,734) - (253,683,734)Depreciation 126,157,070 - 126,157,070

(127,526,664) - (127,526,664)Depreciation charge for the period (590,155,117) (12,654,690) (602,809,807)Closing net book value 4,473,137,416 171,716,860 4,644,854,276

At Jun 30, 2014Cost 5,949,113,947 228,816,760 6,177,930,707Accumulated depreciation (1,475,976,531) (57,099,900) (1,533,076,431)Net book value 4,473,137,416 171,716,860 4,644,854,276


related parts

(Rupees)


Unaudited AuditedSep 30, 2014 Jun 30, 2014

7 DIMINISHING MUSHARAKAH FINANCING PAYABLE - SECURED

Musharakah financing 7.1 1,859,210,760 1,729,190,390Due within one year (846,926,405) (804,727,207)

1,012,284,355 924,463,183

7.1 Financing from banking and financial institutions 1,781,188,772 1,631,007,166Financing from modarabas 78,021,988 98,183,224

1,859,210,760 1,729,190,390

(Rupees)

8 CONTINGENCIES AND COMMITMENTS

8.1 Contingencies

8.1.1 There were no contingencies outstanding as at Sep 30, 2014 other than as explained below:

8.1.2 Sindh Sales Tax On Operations & Maintenance Services of the Modaraba

During the last year, the Assistant Commissioner - Sindh Revenue Board (SRB) issued order in original No. 160 of 2013 dated July 12, 2013 demanding sindh sales tax of Rs. 25.633 million @ 16% on total Operation & Maintenance income of the Modaraba for the year ended June 30, 2012 amounting to Rs. 160.204 million.

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 to the Commissioner Appeals - SRB. Simultaneously, the Modaraba also filed a Constitutional Petition in the Honourable High Court of Sindh regarding this levy of Sindh sales tax by virtue of which the Honourable High Court of Sindh kindly stayed the demand of Sindh sales tax vide its order dated October 11, 2013. However, subsequently the Honourable 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 is pending before Commissioner Appeals - SRB.

The Commissioner Appeals - SRB vide his order in appeal number 16/2014 dated February 25, 2014 reduced the demand of sales tax from Rs. 25.633 million to Rs. 12.238 million stating that the differential amount of Rs. 13.395 million pertains to the services rendered outside the province of Sindh.

The Modaraba has filed a Constitutional Petition CP No. D-1190 in the Honourable High Court of Sindh against the order of Commissioner Appeals - SRB by virtue of which the Honourable High Court of Sindh vide its order dated March 11, 2014 has suspended the operation of impugned order of Commissioner Appeals - SRB. The Management believes that the outcome of petition will be in favour of the Modaraba and accordingly no provision has been made in these financial statements.

This represents the rentals receivable by the Modaraba in future periods in respect of Ijarah assets given under long-term arrangements.

8.2 Commitments

8.2.1 Contractual rentals receivable on Ijarah contracts

Rentals receivable in future 245,972,800 388,382,600 - 634,355,400 334,320,400 388,382,600 - 722,703,000

Total

Due after one year but

within five years

Due after five years

TotalDue within

one year

Due after one year but within

five years


(Audited) June 30, 2014

(Rupees)



Due within one year

8.2.2 Ijarah rentals payable

This represents amount payable against Ijarah arrangements with various financial institutions. Details of these amounts payable are as follows:

Due within one year


five yearsTotal Total

Future Ijarah rentals payables 244,830,594 224,967,003 469,797,597 536,296,168


five years

275,524,295260,771,873

(Rupees)

(Unaudited) September 30, 2014 (Audited) June 30, 2014

Due within one year

8.2.3 Commitments in respect of outstanding letter of credit and registered import contracts amount to Rs. Nil (Sep 2013: Rs. Nil).

OPERATING EXPENSES Sep 30, 2014 Sep 30, 2013

Salaries, wages and other staff benefits 105,336,719 97,111,097Depreciation expense 186,412,148 105,861,229Repairs and maintenance cost 109,292,832 89,591,175

70,462,326 42,740,583Fleet vehicles running cost 10,843,849 5,998,690


(Rupees)

Vehicles running cost 6,588,830 5,413,386Insurance cost - equipments 6,327,762 5,257,153Travelling and conveyance 2,011,588 3,426,510

1,356,745 1,698,902498,632,799 357,098,725

ADMINISTRATIVE AND DISTRIBUTION EXPENSES

Salaries, wages and other staff benefits 8,287,163 6,641,5322,374,600 2,448,700

Vehicle running costs 1,399,030 1,544,343Travelling and conveyance 597,168 966,667Depreciation expense 2,318,692 1,738,311Legal and professional charges 3,095,108 2,039,122Telephone, postage and fax charges 536,115 468,072Advertisement and sales promotion 245,188 362,080Printing and stationery 423,211 425,297Insurance cost - vehicles 514,670 420,906Training, meetings and tender participation 968,395 327,348Repairs and maintenance cost 16,271 1,073,313Entertainment 522,363 483,710Miscellaneous 772,616 766,412

22,070,590 19,705,813

9

Ijarah rentals

Rent expense

10

Commission



7 DIMINISHING MUSHARAKAH FINANCING PAYABLE - SECURED

Musharakah financing 7.1 1,859,210,760 1,729,190,390Due within one year (846,926,405) (804,727,207)

1,012,284,355 924,463,183

7.1 Financing from banking and financial institutions 1,781,188,772 1,631,007,166Financing from modarabas 78,021,988 98,183,224

1,859,210,760 1,729,190,390

(Rupees)

8 CONTINGENCIES AND COMMITMENTS

8.1 Contingencies

8.1.1 There were no contingencies outstanding as at Sep 30, 2014 other than as explained below:

8.1.2 Sindh Sales Tax On Operations & Maintenance Services of the Modaraba

During the last year, the Assistant Commissioner - Sindh Revenue Board (SRB) issued order in original No. 160 of 2013 dated July 12, 2013 demanding sindh sales tax of Rs. 25.633 million @ 16% on total Operation & Maintenance income of the Modaraba for the year ended June 30, 2012 amounting to Rs. 160.204 million.

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 to the Commissioner Appeals - SRB. Simultaneously, the Modaraba also filed a Constitutional Petition in the Honourable High Court of Sindh regarding this levy of Sindh sales tax by virtue of which the Honourable High Court of Sindh kindly stayed the demand of Sindh sales tax vide its order dated October 11, 2013. However, subsequently the Honourable 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 is pending before Commissioner Appeals - SRB.

The Commissioner Appeals - SRB vide his order in appeal number 16/2014 dated February 25, 2014 reduced the demand of sales tax from Rs. 25.633 million to Rs. 12.238 million stating that the differential amount of Rs. 13.395 million pertains to the services rendered outside the province of Sindh.

The Modaraba has filed a Constitutional Petition CP No. D-1190 in the Honourable High Court of Sindh against the order of Commissioner Appeals - SRB by virtue of which the Honourable High Court of Sindh vide its order dated March 11, 2014 has suspended the operation of impugned order of Commissioner Appeals - SRB. The Management believes that the outcome of petition will be in favour of the Modaraba and accordingly no provision has been made in these financial statements.


8.2 Commitments

8.2.1 Contractual rentals receivable on Ijarah contracts

Rentals receivable in future 245,972,800 388,382,600 - 634,355,400 334,320,400 388,382,600 - 722,703,000

Total

Due after one year but

within five years


TotalDue within

one year


five years


(Audited) June 30, 2014

(Rupees)



Due within one year

8.2.2 Ijarah rentals payable

This represents amount payable against Ijarah arrangements with various financial institutions. Details of these amounts payable are as follows:

Due within one year


five yearsTotal Total

Future Ijarah rentals payables 244,830,594 224,967,003 469,797,597 536,296,168


five years

275,524,295260,771,873

(Rupees)

(Unaudited) September 30, 2014 (Audited) June 30, 2014

Due within one year

8.2.3 Commitments in respect of outstanding letter of credit and registered import contracts amount to Rs. Nil (Sep 2013: Rs. Nil).

OPERATING EXPENSES Sep 30, 2014 Sep 30, 2013

Salaries, wages and other staff benefits 105,336,719 97,111,097Depreciation expense 186,412,148 105,861,229Repairs and maintenance cost 109,292,832 89,591,175

70,462,326 42,740,583Fleet vehicles running cost 10,843,849 5,998,690


(Rupees)

Vehicles running cost 6,588,830 5,413,386Insurance cost - equipments 6,327,762 5,257,153Travelling and conveyance 2,011,588 3,426,510

1,356,745 1,698,902498,632,799 357,098,725

ADMINISTRATIVE AND DISTRIBUTION EXPENSES

Salaries, wages and other staff benefits 8,287,163 6,641,5322,374,600 2,448,700

Vehicle running costs 1,399,030 1,544,343Travelling and conveyance 597,168 966,667Depreciation expense 2,318,692 1,738,311Legal and professional charges 3,095,108 2,039,122Telephone, postage and fax charges 536,115 468,072Advertisement and sales promotion 245,188 362,080Printing and stationery 423,211 425,297Insurance cost - vehicles 514,670 420,906Training, meetings and tender participation 968,395 327,348Repairs and maintenance cost 16,271 1,073,313Entertainment 522,363 483,710Miscellaneous 772,616 766,412

22,070,590 19,705,813

9

Ijarah rentals

Rent expense

10

Commission


12 TAXATION

12.1 As per the Second Schedule to the Income Tax Ordinance, 2001, the income of a non-trading Modaraba is exempt from income tax provided that it distributes 90% of its profits to its certificate holders for the year after making appropriation for statutory reserves. The Modaraba intends to avail this exemption by distributing 90% of its profits to its certificate holders after making appropriation for statutory reserves. Accordingly, no provision in respect of current and deferred tax has been made in this condensed interim financial information.

The Additional Commissioner of Inland Revenue (CIR) has made an assessment under section 122 (5A) of the Income Tax Ordinance, 2001 in respect of tax years 2007, 2008 and 2009 where the operational and maintenance income of the Modaraba has been treated as "trading activity". Consequently, the expenses have been prorated and income has been assessed and accordingly an assessment order was passed in which demand of Rs. 22.876 million was raised.

The CIR (Appeal-II) vide his order no 41 to 43 dated February 9, 2011 has cancelled the above mentioned order. However, the Income Tax Department has filed appeal before the Income Tax Appellate Tribunal (ITAT) against the order of CIR (Appeals-II). During the year 2013, the Appellate Tribunal Inland Revenue of Pakistan passed an order in favour of the Modaraba stating that there is no merit in the appeals of the Income Tax Department.

The Income Tax Department filed appeal before the Honourable High Court of Sindh against the order of ITAT which was dismissed by the Honourable High Court of Sindh vide order dated January 01, 2014 on the basis that the question of law cannot be framed on merit.

12.2 The income tax returns of the Modaraba have been filed up to the financial year ended June 30, 2013 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.

Sep 30, 2014 Sep 30, 2013

11 FINANCE COSTS

Financial cost on Diminishing Musharakah financing 49,845,699 36,818,985Exchange loss 6,207,385 4,460,077Bank charges and commission 282,875 142,475

56,335,959 41,421,537


(Rupees)

Details of transactions with related parties during the period are as follows:

Sep 30, 2014 Sep 30, 2013

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 112,381,742 89,720,491

Purchase of parts and services 98,895,949 78,765,412

Rental revenue 1,302,500 522,500

Allied Engineering and Services (Private) Limited - Staff Provident Fund

Contribution to the staff provident fund 1,616,832 1,435,307


(Rupees)


Sep 30, 2014 Jun 30, 2014


Outstanding certificates 24,375,000( June 30, 2014: 24,375,000) 243,750,000 243,750,000

Payable to the Modaraba Management Company 1,851,861 7,057,997

Allied Engineering and Services (Private) Limited (the holding company of the Modaraba Management Company)

Outstanding certificates 36,907,231 (June 30, 2014: 36,907,231) 369,072,310 369,072,310

Payable against purchase of parts and services 403,235,147 200,173,491



(Rupees)

14 DATE OF AUTHORISATION

These financial statements were authorised in the meeting of the Board of Directors of the Management Company held on October 22, 2014.




(Modaraba Management Company)

12 TAXATION

12.1 As per the Second Schedule to the Income Tax Ordinance, 2001, the income of a non-trading Modaraba is exempt from income tax provided that it distributes 90% of its profits to its certificate holders for the year after making appropriation for statutory reserves. The Modaraba intends to avail this exemption by distributing 90% of its profits to its certificate holders after making appropriation for statutory reserves. Accordingly, no provision in respect of current and deferred tax has been made in this condensed interim financial information.

The Additional Commissioner of Inland Revenue (CIR) has made an assessment under section 122 (5A) of the Income Tax Ordinance, 2001 in respect of tax years 2007, 2008 and 2009 where the operational and maintenance income of the Modaraba has been treated as "trading activity". Consequently, the expenses have been prorated and income has been assessed and accordingly an assessment order was passed in which demand of Rs. 22.876 million was raised.

The CIR (Appeal-II) vide his order no 41 to 43 dated February 9, 2011 has cancelled the above mentioned order. However, the Income Tax Department has filed appeal before the Income Tax Appellate Tribunal (ITAT) against the order of CIR (Appeals-II). During the year 2013, the Appellate Tribunal Inland Revenue of Pakistan passed an order in favour of the Modaraba stating that there is no merit in the appeals of the Income Tax Department.

The Income Tax Department filed appeal before the Honourable High Court of Sindh against the order of ITAT which was dismissed by the Honourable High Court of Sindh vide order dated January 01, 2014 on the basis that the question of law cannot be framed on merit.

12.2 The income tax returns of the Modaraba have been filed up to the financial year ended June 30, 2013 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.

Sep 30, 2014 Sep 30, 2013

11 FINANCE COSTS

Financial cost on Diminishing Musharakah financing 49,845,699 36,818,985Exchange loss 6,207,385 4,460,077Bank charges and commission 282,875 142,475

56,335,959 41,421,537


(Rupees)

Details of transactions with related parties during the period are as follows:

Sep 30, 2014 Sep 30, 2013


Modaraba Management Company's remuneration - -

Allied Engineering and Services (Private) Limited(holding company of the Modaraba Management Company)

Purchase of assets 112,381,742 89,720,491

Purchase of parts and services 98,895,949 78,765,412

Rental revenue 1,302,500 522,500


Contribution to the staff provident fund 1,616,832 1,435,307


(Rupees)


Sep 30, 2014 Jun 30, 2014


Outstanding certificates 24,375,000( June 30, 2014: 24,375,000) 243,750,000 243,750,000

Payable to the Modaraba Management Company 1,851,861 7,057,997

Allied Engineering and Services (Private) Limited (the holding company of the Modaraba Management Company)


Payable against purchase of parts and services 403,235,147 200,173,491



(Rupees)

14 DATE OF AUTHORISATION

These financial statements were authorised in the meeting of the Board of Directors of the Management Company held on October 22, 2014.




(Modaraba Management Company)

1st Quarter Report 2014

Documents

Allied sep 2014arm.com.pk/uploads/files/pdf/Quarterly_Report_September_2014.pdf · The Board of Directors of Allied Engineering Management Company (Private) Limited, the management