Allied Rental Modaraba : Transmission of Quarterly Report for the Period Ended Sep-2023

Quarterly Report September 2023

2 Company Information

3 Director Report

9 Director Report (Urdu)

1. Condensed Interim Financial Position (Unaudited)
2. Condensed Interim Profit and Loss Account (Unaudited)
3. Condensed Interim Statement of Comprehensive Income (Unaudited)
4. Condensed Interim Cash Flow Statement (Unaudited)
5. Condensed Interim Statement of Changes in Equity (Unaudited)
6. Notes to the Condensed Interim Financial Information (Unaudited)

Quarterly Report September 2023 1

Modaraba Information

2

Directors' Report

For the period ended September 30, 2023

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, 2023.

Financial Highlights	Rs in '000
Gross Revenue from operations	1,479,600
Net Revenue after Provincial Sales Tax	1,315,518
Net Profit for the period	177,850
Net profit margin	13.5%
Earning per certificate	Re. 0.81

Review of Operations

We are pleased to announce that despite the challenging economic climate marked by fiscal concerns, currency devaluation, import restrictions, and several other industry- related challenges, the modaraba has successfully maintained its growth trajectory. Both revenue and profitability have demonstrated favorable trends. Over the course of the last three months, our revenue surged by 14%, reaching Rs. 1,316 million from Rs. 1,249 million during the same period in the previous year.

This year, the Power Generation segment experienced a slight decline in revenue, a departure from the previous year's growth trends, primarily due to challenges such as a scarcity of gas supply to captive power units and high capital costs for power generation equipment. Conversely, the Outbound Logistics segment saw a substantial sales increase, though it faces challenges like competitive pricing from the unorganized sector. The implementation of the axle load regime is expected to be beneficial. Meanwhile, the Machines and Cranes as well as Material Handling Equipment (MHE) segment achieved impressive revenue growth, thanks to more efficient machine deployment and a strategic shift to higher-margin projects, despite the challenges of an unorganized sector and a shortage of skilled workers in the machine rental industry.

In the current period, our total operating expenses have remained stable compared to the previous year. However, there has been a positive decrease in expenses as a percentage of revenue, dropping from 72% to 68%. This improvement is mainly due to increased efficiency, especially in repair and maintenance. Although certain costs like fleet vehicle running expenses, administrative, and distribution costs have increased, they are aligned with increased sales. There was also a minor 1% increase in markup costs due to a higher KIBOR base rate.

Quarterly Report September 2023 3

As the tax exemption available to Modaraba has been withdrawn, a current tax charge of Rs. 125 Million have been booked in the Profit and loss account. This includes Rs. 109 Million as Current Tax for the year and Rs. 16 Million for deferred tax liability arising due to timing differences.

Restructuring of the Modaraba

As mentioned in previous annual and quarterly reports due to withdrawal of the Tax Exemption on Modarabas with effect from July 1, 2021, as announced earlier, the Management decided to restructure its current legal structure of the Modaraba and separate the existing businesses with all its assets and liabilities, including all contingent liabilities into two separate Private Limited Companies, one for the Rental Business of all Machines and Equipment and another for the Logistics business. The petition for the scheme of arrangement was filed in the Sindh High Court (SHC) on October 10, 2022. Thereafter the SHC accepted the petition for hearing and ordered to convene the Extra Ordinary General Meeting of the certificate holders / shareholders of the Modaraba and other petitioner companies and publication of the petition in the official gazette. The Extra ordinary general meetings of all the petitioner companies were conducted on November 25, 2022 wherein, the resolution approving the scheme of arrangement was passed unanimously by the certificate holders / shareholders of all the petitioner companies. Thereafter, the minutes of the meetings of all the petitioners were submitted in the SHC. All the relevant information / disclosures were timely made to the stakeholders through PSX data portal. The publication in the official gazette has been completed in the month of October 2023. At present only the final hearing at SHC to decide on the matter is pending, hence, the petition is awaiting the final decision. In compliance with regulatory and listing requirements all appropriate and relevant disclosures were made during the year on the PSX Board to timely inform our Certificate holders. The modaraba management expects to get approval from the SHC before June 30, 2024.

More than 95% certificates of the Modaraba are held by the associated and the group companies by virtue of which this transaction will be considered as a transaction under common control and will be accounted for under predecessor method of accounting in accordance with the requirements of 'Accounting for Common Control Transactions' standard (which specifies the accounting for common control transactions) issued by the SECP. Currently, there is no potential impact that requires adjustment to the carrying values and classification of assets and liabilities in the books of the Modaraba as at the reporting date.

The Management will remain cautious and prudent for its investment strategy on all segments of the business, we expect the economy to bounce back in FY 2023-24, with renewed focus on CPEC and major infrastructure and mining projects, pushing industrial investment and growth.

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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 of the Board
	Murtaza Ahmed Ali
October 26, 2023	Chief Executive

Quarterly Report September 2023 5

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