The KSE-100 index witnessed sustained improvement at the back of expected results of HUBCO and PTCL. Adamjee Insurance registered an increase despite weak fundamentals. ICI Pakistan also improved. However, technical correction has become overdue and may become a reality next week.

The enhanced activity in HUBCO and PTCL is based on the forecast that HUBCO may declare around 30 per cent final dividend — making total payout around 50 per cent due to ample funds and also to compensate for no return paid to shareholders in last couple of years.

PTCL is expected to announce 25 per cent dividend. This may be as per dividend payment policy followed by the company. However, at current prices dividend yield will be very attractive.

The Modaraba, managed by a fully owned subsidiary of Habib Bank, has posted Rs 54.2 million profit for the year ending June 30, 2001 as against a profit of Rs 110.78 million for the previous year. The significant difference between 2001 and 2000 was of provision against potential lease losses. While the Modaraba made a provision of Rs 1.33 million under this head for the year 2000, provision for the year 2001 was Rs 33.57 million. Analysts believe that the decision was an astute move as the Modaraba was able to settle this issue and concurrently retain profitability and dividend payout to the shareholders. At the same time, it has also been successful in implementing the SECP's requirement of provisioning and ensuring healthy future earnings stream. The decision has caused a 48 per cent decline in profit after tax but managed to keep the bottomline well above the negative figure.

The company was able to improve its dividend payout for the year ending June 30, 2001 as compared to previous year mainly due to reduction in financial charges. Sales for the year 2001 increased and had a positive impact. Amount due from the government under pricing formula came down from Rs 1,656.7 million for year 2000 to Rs 1,079.2 million for the year under review. While there was increase in administrative and selling expenses, financial expenses came down from Rs 321 million to Rs 271 million during this period. Improvement in other income over the previous year helped in posting Rs 73.5 million profit after tax for the year as against a profit of Rs 57.5 million for the previous year.

The company was able to improve gross margin and thereby lower its loss for the year ending June 30, 2001. Gross profit increased from Rs 9.3 million for the year 2000 to Rs 61.8 million for the year under review. An operating profit of Rs 53 million was not enough to take care of financial charges amounting to Rs 84.7 million. Total accumulated loss as at June 30, 2001 amounted Rs 425 million. The reason for posting persistent loss is very high financial charges. Unless sponsors inject fresh funds the company would never be able to post any profit.

Escort has posted a meager Rs 687,642 profit after tax for the year ending June 30, 2001 as against a profit of above Rs 8 million for the previous year. This did not allow Escort to declare any dividend for the year 2001. While there was increase income higher expenditures eroded the benefit. Income increased from Rs 94.6 million to Rs 97.8 million and expenditures went up from Rs 80 million to slightly more than Rs 88 million. On the expenditure side cost/return on deposits and borrowing went up from Rs 58.9 million to Rs 63.4 million. Administrative and operating expenses went up from Rs 20.9 million to Rs 24.5 million during this period. Provision against non-performing Morabaha financing increased by about 50 per cent as compared to the previous year. All these factors reduced earnings per share from Rs 0.407 for the year 2000 to Rs 0.034 for the year under review.

The Board of Directors of Interbank have recommended 30 per cent final dividend for the year ending June 30, 2001 and improve its payout over the previous year. Despite a reduction in income the bank was able to post higher profit due to reduction in expenditure — a reduction from Rs 386.4 million for year 2000 to Rs 310.8 million for the year under review. The bank posted Rs 71.9 million profit before tax for the year 2001 as compared to Rs 32 million for the previous year. However, this was reduced to Rs 45.9 million profit after tax due to very high provision for tax. Tax provision for year 2001 was Rs 18 million as compared to a provision of Rs 2.5 million for the previous year. Provision for deferred tax was higher — Rs 7 million.

On total sales of Rs 329.7 million the company has posted profit after tax of Rs 9.2 million for the first half of year 2001, an improvement over the corresponding period of previous year. The company posted Rs 32.5 million profit and financial charges amounting to Rs 22 million reduced profit before tax to Rs 12 million.