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InterAsia Leasing Company Limited
(Annual Report 1996)
CONTENTS
Corporate Information 2
Directors' Report And Chairmans' Review 4
Notice of Meeting 7
Auditors' Report 8
Balance Sheet 10
Profit And Loss Account 12
Cash Flow Statement 13
Notes To The Accounts 14
Pattern Of Shareholding 24
CORPORATE INFORMATION
Board of Directors
Inam-ul-Haq, Chairman.
Rauf Baksh Kadri.
Naveed A. Khan, Chief Executive.
Rashid Zahir, Nominee Director (SAPICO).
Shahid Ghaffar, Nominee Director (NIT).
Khalid Malik.
Fahim-ul-Haq.
Managing Director Haroon Sharif
Company Secretary Syed Fazal Ahmed
Bankers Crescent Investment Bank Ltd.
Deutsche Bank Ltd.,
Schon Bank Ltd.
Legal Advisers
Cornelius Lane & Mufti, Advocates & Solicitors,
Nawa-i-Waqt House, 4-Fatima Jinnah Road,
Lahore-54000, Pakistan.
Auditors
Khalid Majid Husain Rahman, Chartered Accountants,
2nd floor, A1-Malik Center, 70 West, G-7/F-7,
Jinnah Avenue, Islamabad, Pakistan.
Registrar and Share
Transfer office
Universal Management Services (Ptv.) Ltd.,
Room No. 205, Central Hotel,
Abdullah Haroon Road, Karachi, Pakistan.
Ph: 5688094.
Registered Office
26-D, 1 st Floor, Kashmir Plaza,
Jinnah Avenue, Blue Area,
Islamabad, Pakistan.
Ph: 270365, 270366, 270367.
Fax: 814868.
Year of Establishment 1993
Credit Rating BB+ (Long term) by PACRA.
Senior Management
Munawar Suleman, Senior Vice President (Branch Manager Karachi)
Zargham K. Durrani, Vice President (Branch Manager Lahore).
Khawaja Zia Abbas, Assistant Vice President.
Listings Karachi and Islamabad Stock Exchange.
Liaison Offices
Karachi:
415, Clifton Centre, Khayaban-e-Roomi,
Clifton, Karachi-75600, Pakistan.
Ph: 5862565, 5863051,
Fax: (92-21) 5865499.
Lahore:
F-2, First Floor, Empire Centre,
Main Boulevard, Gulberg III,
Lahore, Pakistan.
Ph: 5750761,5755723.
Fax: 5755391.
Other LTV Group Companies
Bankers Equity Limited.
Long Term Venture Capital Modaraba.
First Interfund Modaraba.
LTV Housing Finance Limited (formally Interfund Housing Finance Ltd.)
DIRECTORS' REPORT AND REVIEW BY THE CHAIRMAN
The Directors have great pleasure in presenting the fourth Annual Report together with
Audited Accounts of InterAsia Leasing Company Limited for the period July 01, 1995 to
June 30, 1996. Your company has managed to achieve a reasonable level of growth in all
major areas of business. Looking at the existing slow down in economic activity in the
country, it was only achievable because of management's prudent approach towards
building up a productive and performing investment portfolio.
The Business
After completing the third profitable year of operations, the company is clearly committed
to further extend lease financing for industrial development. Looking at the all time low
performance of the capital market in Pakistan, InterAsia did not play any active role in the
stock market during the year under review. However, as part of the LTV Consortium, the
company has taken a long term strategic equity stake of Rs. 15 million in Bankers Equity
Limited. This investment certainly adds strength to InterAsia's corporate image and will
compliment resources for future business growth.
Leasing operations as well as revenues and income have shown a significant growth over
the figures of last year. The company has consolidated its net worth and to strengthen its
balance sheet it has made a provision for contingencies, in addition to provision for turn
overtax and outstanding receivables. The growth however does not actually depict the
attainment of budgetary targets mainly due to depressed industrial activity in the country.
On the whole, results of 1996 indicate an overall healthy trend for your company as
summarized below.
Comparative Financial Highlights (Rs. )
1996 1995 1994
(June) (June/6months)      (December)
Lease investments 305, 821,853 245,030,349 194,842,230
Revenues 35,904,296 16,852,516 26,689,286
Expenditure 25,302, 570 11,723,360 9, 987,604
Profit 10,206,722 5,129,156 16,701,682
Net Worth 127,788,458 117,581,736 112,452,580
The Investment Portfolio
InterAsia has a lease portfolio of about Rs. 300 million which is well diversified in terms
of geographical risk, sectoral distribution and asset wise exposures. The major sectors
where leases have been disbursed include:
1. Textiles 15.0
2. Cement 13.0
3. Chemicals 11.0
4. Food & Allied 10.0
5. Transport & Communications 11.0
6. Pharmaceutical 4.5
7. Engineering 7.0
8. SMEs 15.0
9. Others 13.5
The company strongly supports small and medium sized enterprises (SMEs) and currently
over 15% of the investment portfolio is in the SMEs. The company makes a conscious
effort to keep its investment portfolio well diversified.
Credit Rating
InterAsia has been assigned a long term credit rating of BB+ in 1996 from Pakistan Credit
Rating Agency (Pvt.) Limited (PACRA) which is an associate of London based IBCA, the
third largest credit rating agency in the world. IBCA is recognized by Securities and
Exchange Commission in the USA and by authorities in all major financial markets.
InterAsia's credit rating is also being published in Financial Times Credit Ratings in
Emerging Markets.
Certificates of Investment (COIs)
After receiving formal approval from the Corporate Law Authority (CLA), Government
of Pakistan, InterAsia launched several lucrative saving schemes through certificates of
investments (COIs). The Company has managed to raise over Rs. 60 million through
COIs in 1995-1996 which reflects the market's confidence in the management.
Human Resource Development
The company has strengthened its human resource base by posting a senior executive from
one of its group companies having an excellent record of performance as Managing
Director at its head office in Islamabad. As a part of special emphasis on human resource
development, a number of executives were deputed to participate in management training
programmes conducted by reputable institutions as well as in those organized in house.
Macro Economic Environment
The general politico economic conditions especially the outlook of industry affect the
demand for leasing and the size of fiscal deficit determines the availability of private
savings to the private sector institutions influencing the supply side of leasing. This
scenario imposes constraints on lease financing forcing leasing institutions to make
appropriate adjustments in terms of lease size and sectoral exposures. The performance of
the economy as a whole has shown a mixed trend during the year under review. With
improvements in the economy, we can expect a marked increase in business.
Future Outlook
According to a recent report published by International Finance Corporation (IFC), in
many developing economies, leasing has been growing very rapidly. Between 1988 and
1994, new leases grew from US$ 15 billion to USS 44 billion. Pakistan is following the
same trend and leasing industry is bound to grow in future as the country has to broaden
and modernize its industrial base. Our country has a tremendous potential for long term
economic development. It is our earnest hope that with a more sustainable macro
economic frame-work, privatization and financial sector reform, more favourable
conditions will prevail for the future growth of business and greater prosperity of the
country.
Acknowledgment
The Directors would like to place on record their thanks to the shareholders for their
confidence in the Company, to our clients for their continued support and the executives
and staff for the hard work put in by them for their commitment, competent management,
and conduct of company's business.
For and on behalf of Board of Directors
-Sd-
Islamabad Inam-ul Haq
September 26, 1996 Chairman
NOTICE OF MEETING
Notice is hereby given that Fourth Annual General Meeting of INTERASIA LEASING
COMPANY LIMITED will be held at the registered office of the Company, 26-D,
Kashmir Plaza, Jinnah Avenue, Blue Area, Islamabad, on Thursday October 31, 1996 at
4.00 P.M. to transact the following business.
ORDINARY BUSINESS
1. To confirm the Minutes of the Third Annual General Meeting held on Monday,
February 26, 1996.
2. To receive, consider and adopt the audited accounts of the Company for the
period ended June 30, 1996 together with the Directors' and auditors' report
thereon.
3. To appoint Auditors for the year 1996 and fix their remuneration. The present
auditors, M/s. Khalid Majid Husain Rehman, Chartered Accountants retire and
being eligible, to offer themselves for reappointment.
4. To transact any other business with the permission of the Chair.
By order of the Board
SYED FAZAL AHMED
Karachi: October 9, 1996. Company Secretary
NOTES:
1. The Register of Members of the Company will remain closed from October 19,
1996 to October 27, 1996 (both days inclusive)
2. A member entitled to attend and vote at the meeting is entitled to appoint a proxy
to attend and vote for him/her. A proxy need not to be a member of the Company.
3. An instrument of proxy and the power of Attorney or other authority (if any)
under which it is signed, or a notarially certified copy of such power of attorney,
in order to be valid must be deposited at the registered office of the Company not
less than 48 hours before the time of the meeting.
4. Members are advised to lodge shares for transfer at the office of our Registrar,
Universal Management Service (Pvt.) Ltd., Room Nos. 205-Central Hotel,
Abdullah Haroon Road, Karachi, Tel. No. 5688094.
5. Members are requested to notify any change in addresses immediately.
AUDITORS REPORT TO THE MEMBERS
We have audited the annexed balance sheet of Inter Asia Leasing Company Limited as at June 30,
1996 and the related profit and loss account and cash flow statement, together with the notes
forming part thereof, for the period then ended and we state that we have obtained all the
information and explanations which to the best of our knowledge and belief were necessary for
the purposes of our audit and, after due verification thereof, we report that:
(a) in our opinion, proper books of account have been kept by the Company as required by
the Companies Ordinance, 1984;
(b) in our opinion:
(i) the balance sheet and profit and loss account and cash flow statement together with
the notes thereon have been drawn up in conformity with the Companies Ordinance,
1984 and are in agreement with the books of account and are further in accordance
with accounting policies consistently applied;
(ii) the expenditure incurred during the period was for the purposes of the Company's
business; and
(iii) the business conducted, investments made and the expenditure incurred during the
period were in accordance with the objects of the Company;
(c) in our opinion and to the best of our information and according to the explanations given
to us, the balance sheet, profit and loss account and cash flow statement, together with the
notes forming part thereof, give the information required by the Companies Ordinance,
1984 in the manner so required and respectively give a true and fair view of the state of
the Company's affairs as at June 30, 1996 and of the profit and the cash flow statement for
the period then ended; and
(d) in our opinion zakat deductible at source under the Zakat and Ushr Ordinance, 1980 was
deducted by the company and deposited in the Central zakat fund established under
section 7 of that Ordinance.
Khalid Majid Husain Rahman
Islamabad: September 26, 1996 Chartered Accountants
BALANCE SHEET AS
June 30, June 30,
Note 1996 1995
Rupees Rupees
SHARE CAPITAL AND RESERVES
Authorised Capital
20,000,000 ordinary
shares of Rs. 10 each 200,000,000 200,000,000
========== ==========
Issued, subscribed and paid up capital
10,000,000 ordinary shares of
Rs. 10 each fully paid in cash 100,000,000 100,000,000
Revenue reserves
  Statutory 8,136,692 6,016,347
  General 10,000,000 6,600,718
Contingencies 3 2,313,600 -
Un-appropriated profit 7,338,166 4,964,671
---------- ----------
127,788,458 117,581,736
LONG TERM DEPOSITS 4 29,618,140 29,488,424
CURRENT LIABILITIES
Current portion of long term
deposits 34,289,121 2,536,006
Finances under mark-up
arrangements 5 98,681,839 74,990,391
Accrued and other liabilities 6 11,847,799 3,201,582
Dividend payable 160,665 519,515
---------- ----------
144,979,424 81,247,494
---------- ----------
302,386,022 228,317,654
========== ==========
The annexed notes form an integral part of these financial statements.
AT JUNE 30, 1996
June 30, June 30,
1996 1995
Note Rupees Rupees
OPERATING FIXED ASSETS
-TANGIBLE 7 3,028,115 3,451,034
NET INVESTMENT IN LEASES
Minimum lease payment receivables 268,171,977 214,945,919
Add: Residual value of leased assets 37,649,876 30,084,430
---------- ----------
305,821,853 245,030,349
Less: Unearned lease income (74,461,849) (59,011,061)
---------- ----------
Net investment in leases 231,360,004 186,019,288
Less: Current portion of net
  investment in leases (74,210,255) (55,500,517)
---------- ----------
157,149,749 130,518,771
LONG TERM INVESTMENTS 8 41,351,768 24,154,343
LONG TERM DEPOSITS 161,150 141,250
DEFERRED COSTS 9 2,935,622 3,425,450
CURRENT ASSETS
Current portion of net investment in leases 74,210,255 55,500,517
Advances, prepayments and other
receivables 10 20,811,828 10,333,886
Cash and bank balances 11 2,737,535 792,403
---------- ----------
97,759,618 66,626,806
---------- ----------
302,386,022 228,317,654
========== ==========
PROFIT AND LOSS ACCOUNT FOR
THE PERIOD ENDED JUNE 30, 1996
For the period For the period
from July 01, from January 01,
Note 1995 to June 1995 to June
30, 1996 30, 1995
Rupees Rupees
REVENUES
Income from leasing operations 12 35,409,723 17,946,771
Income/(Loss) from investments 13 (67,376) (1,318,205)
Other Income/(charges) 14 561,949 223,950
---------- ----------
35,904,296 16,852,516
EXPENSES
Administrative and operating expenses 15 99,016,681 6,496,357
Financial charges 16 15,400,902 5,227,003
---------- ----------
25,302,570 11,723,360
---------- ----------
Profit for the year 10,601,726 5,129,156
Provision for taxation
  Current 19 177,295I -
  Prior year 217,709 -
---------- ----------
395,004 -
---------- ----------
10,206,722 5,129,156
Un-appropriated profit
  brought forward 4,964,671 861,346
---------- ----------
15,171,393 5,990,502
Appropriations:
Transfer to statutory reserve 2,120,345 1,025,831
Transfer to contingencies reserve 2,313,600 -
Transfer to general reserve 3,399,282 -
---------- ----------
7,833,227 1,025,831
---------- ----------
Un-appropriated profit carried to balance sheet 7,338,166 4,964,671
========== ==========
The annexed notes form an integral part of these financial statements.
CASH FLOW STATEMENT FOR THE PERIOD
FROM JULY 01, 1995 TO JUNE 30, 1996
1996 1995
Rupees Rupees
CASH FLOWS FROM OPERATING ACTIVITIES
Net profit before taxation 10,206,722 5,129,156
Adjustments for:
Depreciation 674,823 425,688
Deferred costs amortized 1.270,862 604,491
(Income)/1oss from Investments 67,376 1,261,147
(Gain) on sale of fixed assets (59,878) (55,668)
Provision for diminution in the value of
investments - (149,600)
Operating profit before working capital changes 12,159,905 7,215,214
Increase in advances, prepayments and
other receivables (10,477,942)     (31,911)
Increase in investment in leases (106,512,370) (70,739,005)
Recoveries from investment in leases 61,171,654 35,787,218
Increase in long term deposits received 31,882.83 6,453,104
Increase/(decrease) in accrued & other liabilities 8,646.22 (261,162)
Increase in long term deposits     (19,900) (42,000)
Cash generated from operations (15,309,510) (28,833,756)
---------- ----------
Net cash used in operating activities (3,149,605) (21,618,542)
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in deferred cost (781,034) -
Purchase of fixed assets (1.237.615) (1,321,622)
Proceeds from sale of fixed assets 1,045.59 1,007,625