Consistent and strong all round financial
performance is evident in growth in revenues and dividend payout.
First Grindlays Modaraba (FGM) since inception is testimony of the
high quality professional team managing the business and strong
support of the sponsor company. FGM has maintained its leadership
position and continues to be a pioneer in introducing new products and
concepts for development of the modaraba sector for the benefit of its
shareholders.
Dec
10 - 16 , 2001
FGM is managed by Grindlays Services of Pakistan
(Private) Limited (GSP) which is a wholly owned subsidiary of Standard
Chartered Grindlays Bank Limited. In Pakistan, the Standard Chartered
Group, in addition to FGM, comprises of Standard Chartered Bank (SCB)
and Standard Chartered Grindlays Bank (SCGB).
The Management Company (GSP) holds 10% of the
equity and Standard Chartered Grindlays Bank holds another 10%. The
balance 80% is held by the general public, out of which more than 40%
are individual shareholders. The board of directors of the modaraba
management company comprises three nominees of Standard Chartered
Group.
FGM is primarily engaged in leasing of plant &
machinery, motor vehicles (both private and commercial) and
office/computer equipment and operates from offices in Karachi, Lahore
and Islamabad. Today with equity of Rs. 673 million, and gross leased
assets of over Rs.3.4 billion, it is by far the largest modaraba in
the country and ranks amongst the largest and most profitable leasing
entities.
FGM's success story has been made possible through
efficient utilisation of resources and operational practices applied
within the Standard Chartered Group. This standard of performance is
reflected in the individual rating of A2 assigned to FGM by Pakistan
Credit Rating Agency. This represents the highest rating in the entire
modaraba sector and represents " a modaraba in outstanding
financial condition with a consistent record of above average
performance".
The last audited financial year ended June 30, 2001
reflected another year of sound performance and achievements. During
the said year an award was received from Modaraba Association of
Pakistan for highest dividend pay-out (30%) in the entire modaraba
sector, for the year ended June 30, 2000. This pay-out was bettered in
June 30, 2001 with a dividend of 33%. The year ended June 30, 2001 was
also a record year in terms of highest lease disbursement of Rs.966
million, operating income exceeding Rs. 1 billion and net leased
assests portfolio crossing Rs.2 billion mark. (Table 1 summarizes key
financial / performance indicators for FGM for the last 5 years.)
|
TABLE
1
FIVE YEARS AT A GLANCE |
| |
1997 |
1998 |
1999 |
2000 |
2001 |
|
Key
Financial figures (Rs. in millions) |
|
Assets
leased out |
1,436 |
1,563 |
1,811 |
1,922 |
2,096 |
|
Paid-up
Capital |
346 |
374 |
374 |
374 |
374 |
|
Total
Equity |
570 |
592 |
624 |
647 |
673 |
|
Lease
disbursements |
676 |
687 |
769 |
715 |
966 |
|
Operating
Income |
676 |
673 |
755 |
860 |
1,000 |
| Net
Profit |
95
|
105 |
114 |
135 |
149 |
|
Key
Performance Indicators (Rs.) |
|
Dividend
per certificate |
2.20 |
2.20 |
2.20 |
3.00 |
3.30 |
|
Earnings
per certificate |
2.75 |
2.81 |
3.05 |
3.61 |
3.98 |
|
Break-up
value per certificate |
16.47 |
15.83 |
16.68 |
17.30 |
17.99 |
|
Price-Earnings
Ratio |
4.18 |
3.92 |
4.02 |
4.04 |
4.80 |
FINANCIAL HIGHLIGHTS
FGM's profitability ratios of return on assets of
7% and return on equity of 22%, for the year ended June 30, 2001,
continue to remain, by far, the highest amongst all leasing entities
in the country.
During 2001 FGM launched a website at
www.grindlaysmodaraba.com. The website features, inter-alia, useful
information on FGM, various aspects of Islamic finance, leasing and
modarabas, a comprehensive Islamic finance terminology page and links
to other sites on leasing and Islamic finance.
However, one of the biggest achievements of the
year was the introduction of a pioneering Islamic investment scheme
called Certificates of Musharika (COM), formulated within parameters
laid down by the Religious Board and approved by Securities and
Exchange Commission of Pakistan. Through this instrument FGM provides
secure and rewarding investment opportunities for individuals and
companies alike. For FGM, money raised under this scheme, provides
matched funds (FGM leases assets for 3 to 5 years) as these
certificates are issued for periods up to 5 years. (Table 2 summarises
the major features of this investment scheme.) Investment in COMs can
be done directly from FGM or across 21 SCB and SCGB branches without
opening a bank account.
FGM continues to focus on enhancing shareholder
value through optimizing funding mix and booking of quality risk
assets. FGM has demonstrated the ability to maintain its leading
position as reflected by outstanding and consistent performance, good
asset quality and well conceived growth strategy taking cognizance of
the prevailing operating environment.
Standard Chartered Group
In Pakistan, Standard Chartered Group comprises of
Standard Chartered Bank, Standard Chartered Grindlays Bank and First
Grindlays Modaraba.
Standard Chartered has 6 branches in Pakistan; 3 in
Karachi, 2 in Lahore and 1 in Faisalabad, and offers Consumer Banking,
Corporate & Institutional Banking (incl. Cash Management products
& services), Treasury, and Custodial Services to its customers.
Standard Chartered has been providing banking services in this region
for over 137 years. Standard Chartered Grindlays has 15 branches in
Pakistan; 7 in Karachi, 3 in Lahore, 1 in Islamabad, 1 in Rawalpindi,
1 in Quetta and 1 in Peshawar and 1 in Sialkot, and offers Consumer
Banking (including Credit Cards), Corporate Banking, Investment
Banking, Treasury and Custodial Services to its customers. Standard
Chartered Grindlays has been providing banking services in this region
for over 140 years.
Standard Chartered is a London based, international
bank focused on the emerging markets of Asia, the Middle East, Africa
and Latin America. It has significant operations in Hong Kong,
Singapore, Malaysia, Thailand, India, Bangladesh, the United Arab
Emirates and in sub-Saharan Africa. Key businesses are Consumer
Banking, primarily credit cards, mortgages, personal loans and wealth
management, and Wholesale Banking, where the Bank specialises in the
provision of cash management, trade finance, treasury and custody
services. The Group has a network of over 600 offices in more than 56
countries. With a presence in Asia and Africa that goes back nearly
150 years, Standard Chartered has an in-depth understanding of, and a
long-term commitment to, the emerging markets.
|
TABLE 2
Certificates of Musharika (COMs)
Major features of the COM Scheme are given below: |
|
Registered |
A unique registration number
shall be assigned to each certificate upon issue. |
|
Maturity |
Available in tenors of three
months, six months, one year, two years, three years, four
years and five years. |
|
Currency |
Pakistan Rupees only. |
|
Denominations |
Minimum denominations of Rs.
5,000 |
|
Investment
Limit |
A minimum investment of Rs.
10,000 |
|
Expected
returns* |
•3 months 7.00% per annum
• 6 months 8.00% per annum
• 1 year 9.00% per annum
• 2 years 10.50% per annum
• 3 years 11.00% per annum
• 4 years 11.50% per annum
• 5 years 12.00% per annum
|
|
* subject
to change. |
Profit payments are made on
a quarterly bases. |
|
Profit
Calculation |
Profit rates to be computed
on a 365 days basis and paid for the actual number of days the
certificate remains outstanding within the relevant profit
payment quarter. |
|
Premature
Encashment |
Permitted at any time. A
redemption reserve fund equal to 5% of the face value of COMs
outstanding has to be maintained by FGM to cater to premature encashments. |
|
Penalty |
1% of encashment value. |
|
Transferable |
Yes. |
|
Taxation/Zakat/Stamp
duty |
Subject to 2.5% Zakat and
withholding tax 10% wherever applicable. Stamp duty 0.15% of
face value on issue and 0.10% on transfers. |
|
Profit
Payment Mode |
By crossed cheque/ direct
account transfer for SCGB/SCB account holders. |
|
