OLP Modaraba : Transmission of Quarterly Report for the Period ended March 31, 2024

NINE MONTHS REPORT

MARCH 2024

Assisting in Development of the SME Sector in Pakistan

CONTENTS

Modaraba Information	02
Directors' Review	03
Condensed Interim Statement of Financial Position	08
Condensed Interim Statement of Profit And Loss Account
and Other Comprehensive Income (Un-audited)	09
Condensed Interim Cash Flow Statement (Un-audited)	10
Condensed Interim Statement of Changes In Equity	11
Notes to and Forming Part of the Condensed
Interim Financial Statements (Un-audited)	12

www.olpmodaraba.com

For the Nine Months ended March 31, 2024

01

Modaraba Information

Modaraba Company

OLP Services Pakistan (Pvt) Limited

Directors of Modaraba Company

Mr. Shaheen Amin	Chairman
Mr. Raheel Qamar Ahmad	Managing Director
	/ Chief Executive Officer
Mr. Ramon Alfrey	Director
Mr. Nausherwan Adil	Independent Director
Mian Faysal Riaz	Director
Ms. Naila Hasan	Independent Director
Mr. Nadim D. Khan	Director
Company Secretary
Mr. Muhammad Siddique
Audit Committee
Mr. Nausherwan Adil	Chairman
Mr. Ramon Alfrey	Member
Mian Faysal Riaz	Member

Human Resource and Remuneration (HR&R) Committee

Ms. Naila Hasan	Chairperson
Mr. Shaheen Amin	Member
Mr. Raheel Qamar Ahmad	Member
Risk Committee
Mian Faysal Riaz	Chairman
Mr. Nausherwan Adil	Member
Mr. Raheel Qamar Ahmad	Member
Shariah Advisor
Mufti Faisal Ahmed

Auditors

A.F.Ferguson & Co. Chartered Accountants

Bankers/ Financial Institutions

Standard Chartered Bank (Pakistan) Limited (Saadiq) Meezan Bank Limited

United Bank Limited (UBL Ameen) Bank Alfalah Limited (Islamic banking) Allied Bank Limited (Islamic banking) Bank Al Habib Limited (Islamic banking) Habib Bank Limited (Islamic banking)

Pakistan Mortgage Refinance Company Limited

Legal Advisors

Haider Ali Khan

Advocate High Court , Partner,

Fazle Ghani Advocates

Modaraba Company Registered Office

OLP Building, Plot no. 16, Sector no. 24,

Korangi Industrial Area, Karachi.

Modaraba Head Oce:

Office No. 601, 6th Floor,

Syedna Tahir Saifuddin Memorial Foundation Building, Beaumont Road, Civil Lines, Karachi.

Phone: [phone]

Email: [e-mail]

Lahore Branch:

Office No-08, 1st floor,

Park Lane Tower (Mall Of Lahore), 172-Tufail Road, Lahore Cantt. Phone: [phone]

Islamabad Branch:

Ground Floor, Phase 1, State Life Building No. 5, Nazimuddin Road, Blue Area, Islamabad.

Registrars & Share Registration Oce:

Famco Share Registration Services (Pvt) Ltd. 8-F, Next to Hotel Faran, Nursery,

Block 6, P.E.C.H.S., Shahra-e-Faisal, Karachi. Tel: [phone]

Fax: [phone]

Email: [e-mail]

02	For the Nine Months ended March 31, 2024	www.olpmodaraba.com

Directors' Review

For the period ended March 31, 2024

The Board of Directors of OLP Services Pakistan (Private) Limited, the management company of OLP Modaraba is pleased to present the unaudited accounts of OLP Modaraba for the nine months period ended March 31, 2024.

1. Economic Outlook

Pakistan's economy is showing signs of a gradual recovery supported by higher crop output and improvements in manufacturing. Growth is forecast to resume in 2024 and strengthen in 2025 but the continued implementation of policy reforms is crucial to buttressing this momentum and fortifying the country's fiscal and external buffers.

The gross domestic product (GDP) growth is projected to recover modestly to 1.9% in FY2024 from -0.2% in FY2023 as economic reforms take effect and inflationary pressures ease. Adhering to the economic adjustment program is critical to restoring macroeconomic stability and the gradual recovery of growth. Downside risks to the outlook remain high.

In FY2024, growth will be supported by a rebound in private sector investment linked to progress on reform measures. In FY2025, growth is projected to reach 2.8%, driven by higher confidence, reduced macroeconomic imbalances, greater political stability, and improved external conditions. The current account deficit has also fallen to $1.1 billion in the first 7 months of FY2024 from $3.8 billion in the same period in FY2023, as the merchandise trade deficit narrowed by 30.8% with largely reflecting an improvement in trade balance.

Inflation will remain high-at about 25% in FY2024, driven by higher energy prices, but is expected to ease to 15% in FY2025 as inflation expectations moderate and progress on macroeconomic stabilization restores confidence. The central bank has maintained a tightened monetary policy, keeping the policy interest rate at 22% in response to persistent inflationary pressures and external imbalances. The central bank has committed to an appropriately tight policy to lower inflation to its medium-term target range of 5%-7%. Pakistan's total liquid foreign exchange reserves increased to $ 13.421 billion on March 27, 2024, with SBP's reserves stood at $ 8.084 billion and Commercial banks' reserves remained at $ 5.340 billion.

2. Financial Highlights

Financial results are summarized as under:

	March 31,	June 30,
Statement of Financial Position	2024	2023
(Rupees)
Certificate capital	453,835	453,835
Total equity	1,202,960	1,176,623
Total assets	7,385,822	6,824,580
Investment in Ijarah finance and Ijarah Assets	1,333,646	1,627,562
Investments in Diminishing Musharika	4,820,566	4,269,916
Short term Investments	140,715	123,859
Redeemable capital	3,985,785	2,896,605
	Nine months ended	Nine months ended
	March 31,	March 31,
Statement of Profit and Loss	2024	2023
(Rupees)
Revenue (net of Ijarah assets depreciation)	1,193,637	880,793
Financial and other charges	794,100	587,492
Provision / (reversal) of provisions - net	2,415	(8,724)
Operating expenses	203,706	173,867
Profit before modaraba management company's remuneration	197,417	128,158
Profit before taxation	168,130	111,403
Net profit	117,104	81,757

www.olpmodaraba.com	For the Nine Months ended March 31, 2024	03

3. Review of Operations

By the Grace of Allah, your Modaraba's performance during the period under review continued to be strong. The Modaraba's gross revenue (net of Ijarah assets depreciation and including other income) increased by 35.52% from PKR 880.793 million to PKR 1,193.637 million compared to the corresponding period of last year. The main reason behind this was the increase in the benchmark rate and the higher disbursements in the period. Our challenge during this period was the rapid and large movement of the KIBOR rate, which promoted an immediate increase in deposit rates and financial charges but translates into asset repricing with a lag. Financial and other charges increased from PKR 587.492 million to PKR 794.100 million, showing an increase of 35.17% compared to the last year's nine-month period. Despite the risk of an increase in infection rate due to the high discount rate, there is a net provision of PKR 2.415 million, which was due to prudent risk management through pro-actively and subjectively downgrading some stressed customers. Administrative and operating expenses increased by 17.16% from PKR 173.867 million to PKR. 203.706 million, mainly due to high inflation during the period. Profit before taxation increased by 50.92% from PKR 111.403 million to PKR 168.130 million. Whereas net profit for the period increased by 43.23% from PKR 81.757 million to PKR 117.104 million compared to the corresponding period last year.

The portfolio of Ijarah finance, Investments, Diminishing Musharika Finance, and short-term investments stood at PKR 6,295 million compared to PKR 6,021 million as at June 30, 2023, showing an increase of 4.54% during the nine-month period. Total assets increased by 8.22% to PKR 7,386 million, compared to PKR 6,825 million as at June 30, 2023. During the period under review, the Modaraba booked fresh disbursements to the tune of PKR 2,123.85 million as compared to PKR 1,736.57 million during the corresponding period last year.

The business has been driven mainly by deepening relationships with selective clientele and initiating relationships with good names. The asset portfolio has a good mix of multi-nationals, large and medium sized local corporates, selective SME relationships, and an excellent housing and consumer portfolio.

OLP Modaraba manages and monitors risk exposure very prudently. The evaluation of the borrower's credit profile, including repayment ability is made at the time of the grant of facility and regular oversight is carried out thereon. Further, there are Portfolio Management and Early Alert committees which are responsible to ensure portfolio monitoring and timely alerts for possible untoward scenarios.

4. Credit Rating

The Pakistan Credit Rating Agency Limited (PACRA) has maintained the ratings of your Modaraba as AA (Double

1. and A1+ (A one plus) for long-term and short-term respectively. These ratings indicate a low expectation of credit risk and a very strong capacity for timely payment of financial commitments.

5. Acknowledgement

The Board appreciates the support of regulatory authorities, certificate-holders, customers and business partners and looks forward to their support in the future.

Karachi: April ,

Raheel Qamar Ahmad	Ramon Alfrey
Managing Director/ CEO
Director

04	For the Nine Months ended March 31, 2024	www.olpmodaraba.com

453,835

1,202,960

7,385,822

1,333,646

4,820,566

140,715

3,985,785

www.olpmodaraba.com	For the Nine Months ended March 31, 2024	05

1,193,637

794,100

2,415

203,706

197,417

168,130

117,104

06	For the Half Year ended December 31, 2023	www.olpmodaraba.com

www.olpmodaraba.com	For the Nine Months ended March 31, 2024	07

CONDENSED INTERIM STATEMENT OF FINANCIAL POSITION

AS AT MARCH 31, 2024

March 31,	June 30,
2024	2023
(Un-audited)	(Audited)

ASSETS	Note	(Rupees)
Current assets
Cash and bank balances	5	522,148,550	400,254,200
Ijarah rentals receivable	6	78,355,129	103,759,046
Advances, deposits, prepayments and other receivables		334,938,355	161,625,207
Short-term investments	7	140,714,870	123,858,681
Current portion of diminishing musharaka	8.4	1,381,793,096	1,321,802,595
Total current assets		2,457,950,000	2,111,299,729
Non-current assets
Long-term portion of diminishing musharaka	8.4	3,438,772,724			2,948,113,326
Ijarah assets	9	1,333,645,567			1,627,562,155
Tangible assets	10	15,753,859			17,061,707
Intangible assets	11	4,199,343			2,194,932
Deferred tax assets	12	135,500,761			118,347,633
Total non-current assets		4,927,872,254			4,713,279,753
TOTAL ASSETS
	7,385,822,254		6,824,579,482
LIABILITIES AND EQUITY
Current liabilities
Current portion of term finance arrangements	13	624,199,044			1,146,247,638
Current portion of security deposits		155,178,080			169,344,276
Creditors, accrued and other liabilities		405,280,522			415,240,194
Advance Ijarah rentals received		11,900,759			1,653,873
Current portion of redeemable capital		3,802,485,000			2,717,105,000
Unclaimed profit distribution		61,876,759			59,295,174
Provision for taxation - net		157,154,276			129,117,535
Total current liabilities		5,218,074,440			4,638,003,690
Non-current liabilities
Long-term portion of term finance arrangements	13	489,397,346			503,762,218
Long-term portion of security deposits		292,090,567			326,691,002
Long-term portion of redeemable capital		183,300,000			179,500,000
Total non-current liabilities		964,787,913			1,009,953,220
TOTAL LIABILITIES		6,182,862,353	5,647,956,910
CERTIFICATE HOLDERS' EQUITY
Certificate capital
Authorised certificate capital
50,000,000 (June 30, 2023: 50,000,000) certificates of Rs. 10 each
amounting to Rs. 500,000,000 (June 30, 2023: Rs. 500,000,000)
Issued, subscribed and paid-up certificate capital
28,500,000 (June 30, 2023: 28,500,000) certificates of Rs. 10 each fully paid in cash		285,000,000				285,000,000
16,883,530 (June 30, 2023: 16,883,530) bonus certificates of Rs. 10 each		168,835,300			168,835,300
		453,835,300				453,835,300
Capital reserve		578,888,037		578,888,037
Revenue reserve		170,236,564		143,899,235
		1,202,959,901		1,176,622,572
TOTAL LIABILITIES AND EQUITY
	7,385,822,254		6,824,579,482
CONTINGENCIES AND COMMITMENTS	14
The annexed notes from 1 to 26 form an integral part of these condensed interim financial statements.
For OLP Services Pakistan (Private) Limited
(Management Company of OLP Modaraba)

		SD	SD	SD		SD
		Chief Executive		Director		Director		Chief Financial Officer
08		For the Nine Months ended March 31, 2024			www.olpmodaraba.com