Allied Rental Modaraba has announced to issue Right Certificates amount to R 681.525 million divided into 29.250 million certificates at the rate of Rs 23.30 per certificate including premium of Rs. 13.30 per certificate. The Board of Directors has decided to issue 20% Right Certificates i.e. one Right Certificate for every 5 Certificates held at a premium of Rs13.3 per Certificate.
The premium has been worked out based on the Break-up Value of the Certificate as at June 30, 2015 as per audited financial statements less cash dividend paid for the year. Keeping in view the fact that presently the investment opportunities are limited in the country these days, this Rights Issue offers excellent opportunity to the Certificate holders.
The management of ARM is continuously expanding its Rental Fleet, both in Power Generation Rental business and logistics business, where it sees potential for investment and growth. This is evident from the investment of Rs2,018 million in 2013-14 and Rs1,350 Million in 2014-15, which works out to almost half of the 2015 Closing Ijarah Rental Fleet.
Projection for next three years:
| 2016
Rs. in ‘000 |
2017
Rs. in ‘000 |
2018
Rs. in ‘000 |
|
| Revenue | 3,105,242 | 3,345,766 | 3,593,409 |
| Direct Cost | 2,259,346 | 2,529,481 | 2,720,605 |
| Gross Profit | 845,896 | 816,285 | 872,804 |
| Expenses | 433,371 | 342,551 | 343,280 |
| Net Profit | 412,525 | 473,734 | 529,524 |
This year again the Management projects to invest Rs1,000 million mainly in some new Projects pertaining to Power Generation, Forklifts and Logistics Rental Fleet to ensure that ARM remains the leader in Rental Power segment and catches on the opportunity in the logistics business with blue chip companies.
The growth in the previous years was financed from strong internal cash generation by way of profits retention, financing from Islamic Banks, Modarabas and Islamic window of the conventional banks. Rights Issue in the last years not only helped in financing the growth in the Rental Assets but in the process also ensured that Debt : Equity Ratio is maintained for continued availability of credit lines from the banks at continuously reduced mark up rates.
The management feels that there is an opportunity for the Certificate holders to invest in this growth of the ARM. The track record itself depicts the potential benefit that the Rights issue offers to Certificate holders compared to its recent price quoted at the local stock exchanges. In addition, the Rights Issue will also qualify for investment rebate in terms of section 62 of the Income Tax Ordinance, 2001.