| National Development Leasing Corporation Limited |
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|
(Annual Report 1996) |
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Contents |
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| Board
of Directors |
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3 |
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| Directors'
Report |
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4 |
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| Financial
Highlights |
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10 |
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| Auditors'
Report |
|
11 |
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| Financial
Statements |
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12 |
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| Pattern
of Shareholding |
36 |
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| Company
Information |
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38 |
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| Notice
of Meeting |
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40 |
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|
Board of Directors |
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| Mohammad
Salim (Director) |
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| S.M.
Naseem (Director) |
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| Shahid
Hassan (Director) |
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| S.G.
Abbas (Director) |
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| Abdul
Shakoor (Director) |
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| S.M.
Saleera (Chairman) |
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| Mohammad
Naseem (Director) |
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| Tayyeb
Afzal (Managing Director & CE0) |
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|
Directors' Report to the
Shareholders |
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| The
Board of Directors are pleased to announce the financial results for the
eighteen months |
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| ended
June 30, 1996. In compliance with the Finance Act, 1995, your Corporation has
changed |
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| its
year end from December to June and are therefore presenting financial
statements for the |
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| period
January 1995 to June 1996. |
|
|
| Board
of Directors |
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| The
composition of the Board of Directors has not changed except that Mr. S.M.
Saleera was |
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| elected
Chairman of the Corporation in place of Mr. Mohammad Salim on completion of
his tenure. |
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| The
Board wishes to place on record its appreciation for his valuable
contribution and guidance to |
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| the
Corporation. |
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| Financials |
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| Your
directors are pleased to report an after tax profit of Rs 211.6 million
during the eighteen months |
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| ended
June 30, 1996, representing a year on year increase of 20%, and propose that
profits be |
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| appropriated
as under: |
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|
(Rupees in 000's) |
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|
Jun 1996 |
Dec 1994 |
|
|
|
| Profit
before Tax |
|
|
266,619 |
187,156 |
|
| Provision
for Tax |
|
|
55,000 |
30,000 |
|
| Profit
after Tax |
|
|
211,619 |
157,156 |
|
| Unappropriated
profit brought forward |
983 |
89 |
|
|
|
-------- |
-------- |
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|
212,602 |
157,245 |
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|
|
|
| APPROPRIATIONS |
|
| Proposed
Final Dividend |
|
107,827 |
38,775 |
|
| Reserve
for issue of Bonus Shares |
- |
64,625 |
|
| Transfer
to General Reserve |
|
90,000 |
45,000 |
|
| Transfer
to Special Reserve |
|
10,580 |
7,862 |
|
|
-------- |
-------- |
|
|
|
|
208,407 |
156,262 |
|
|
|
|
-------- |
-------- |
|
| Unappropriated
Profit carried forward |
4,195 |
983 |
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|
======== |
======== |
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| Dividend |
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| Your
directors are pleased to recommend a cash dividend of 30%. |
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| The
Economy |
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| The
economic performance of the country during the recent past evokes a mixed
response. GDP |
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| growth
estimates were revised downwards to 6.5% and the deficit target fixed at 5%
of GDP. |
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| These
indicate that the economy is poised to move sideways despite attempts to
improve |
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| revenue
collection. With agriculture still escaping tax, little cut in government
expenditure, |
|
| export
base overly reliant on cotton and agriculture, it is quite likely that the
economic |
|
| health
of the country will remain hinged on agriculture's performance in the
foreseeable |
|
| future. |
|
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| While
the above factors subdue economic expansion, the full effect of last year's
better |
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| cotton
crop is expected to trickle down in the coming year to the rest of the
economy. |
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| Resilience
of the agriculture sector will help attain GDP growth of around 6% in the
medium |
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| to
long term. |
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|
| The
Year in Review |
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| Despite
a less than encouraging economic backdrop, your Corporation has shown results
that |
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| speak
of its commitment and resilience to a changing investment environment. Since
your |
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| Corporation
commands a significant presence in the sector, we have no doubt been touched |
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| by
the variables affecting the economy of the country in general and the leasing
industry in |
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| particular.
The year 1996 heralded some significant changes to the regulatory framework |
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| under
which Non Bank Financial Institutions (NBFIs) operate. These amendments in
essence |
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| streamline
resource mobilisation, specifically the 3 and 6 months Foreign Currency
deposits |
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| and
the repo window with scheduled banks. After a spate of negotiations with the
State Bank |
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| of
Pakistan, NBFIs have been granted an eighteen month period over which short
term foreign |
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| exchange
funding is to be converted into longer tenors. In the long term these rules
will steer |
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| NBFIs
in the right direction, although impact of immediate adjustments will be
felt. For |
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| National
Leasing these reforms come as a manifestation of our own feel for the
direction |
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| in
which all NBFIs should be heading. |
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| Operating
Results |
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| Your
Corporation has posted profits that demonstrate the measure of success in a
changing |
|
| environment.
On a year on year basis lease investment grew by 37% and lease income rose |
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| by
40%. At the same time Net Profits increased by 20%, resulting in an earning
of Rs 2.26 |
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| for
a five rupee share. Total assets showed robust growth at 15%, boosted by
lease disbursements of |
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| Rs
1,659 million. |
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| Your
Corporation has taken a conservative view of the country's stock markets and
marked |
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| all
equity investment down to the market values. We feel this is not only prudent
but also positions |
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| your
Corporation to take advantage of any future upward trend in share prices. |
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| We
continue to make concerted efforts to improve recoveries, especially from
defaulters. Your |
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| Corporation
did not hesitate in initiating several legal proceedings. |
|
|
| Revised
Focus |
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| In
order to increase our approach in the retail segment of the market, your
Corporation launched |
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| new
products, employing advanced advertising techniques that ensure greater
market penetration. |
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| Such
focus is expected to lead towards a larger pool of funds thereby helping
improve long term |
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| funds
ratio. The opening of a second branch in Lahore and the launching of two
income growth |
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| Certificates
(for longer tenors) bears witness to our commitment to tap the retail market. |
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| On
the asset creation side, we are also focusing on leasing small ticket items
in the form of |
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| General
Product Leasing. Having developed a substantial portfolio of big ticket
items, we |
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| are
confident that your Corporation has achieved the financial strength and
expertise that is |
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| crucial
for success in a retail environment. |
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| Funding
for the Future |
|
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| The
industry inheretingly faces the challenge of mismatch between tenors of
sources of |
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| funds
and their utilisation. We therefore, continue to solicit long term lines from
multilateral |
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| agencies
with whom our past performance has held us in good stead. At the same time |
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| your
Corporation is considering other avenues of funding like Asset
Securitisation, Term |
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| Finance
Certificates, etc. |
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| We
have also been successful in establishing credit lines worth Rs 710 million.
Efforts are |
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| now
being made to stretch their tenors to longer term. In addition we have
undrawn |
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| approved
lines worth USD 23.8 million from multilateral agencies. Another USD 15
million |
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| are
under discussion. |
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| Mission
Statement |
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| National
Leasing will continue to play its role as a premier leasing company. We will
focus on |
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| our
core business, while diversifying the portfolio. In continuation of our
policy, exposure in |
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| textile
sector reduced to 25% compared to 40% in June 1995. We have curbed activities
in |
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| underwriting
and Pre IPO commitments, as equity markets are expected to show |
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| volatility. |
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| We
strongly believe that the single most important factor that will empower us
to ride through |
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| the
upcoming challenges is based upon the quality of our customer services. We
will therefore, |
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| endeavour
to continue to innovate products tailored to customer needs, adapt our
internal |
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| work
flows to suit customer conveniences and vigorously train staff to better
handle customer |
|
| needs. |
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| Your
Corporation is poised to face upcoming challenges in an ever changing
environment. |
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| We
intend to step into the next century with a more focused outlook on planning,
management |
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| and
a clear, long term vision encompassing all aspects of the business. The
potential is |
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| immense,
and we hope to set our sights with undistracted attention to the business we
know |
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| best
- leasing. |
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|
| Auditors |
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| The
retiring auditors Messrs Ford, Rhodes, Robson, Morrow, Chartered Accountants,
being |
|
| eligible,
offer themselves for reappointment. |
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| Acknowledgment |
|
| We
offer our sincere gratitude to the Board of Directors, for their continued
guidance and support. |
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| Their
insight has given us the edge over competition, and allowed us the leverage
to adapt |
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| to
an aggressively changing environment. |
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| Our
sincere thanks to the thousands of Customers and Clients for their faith and
trust in us |
|
| and
for their patience and understanding in dealing with us. |
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| We
also wish to place on record our appreciation of all staff members, who have
demonstrated |
|
| unflinching
support for the Corporation, and have risen to the demands of the
organisation |
|
| time
and again. |
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|
| Shareholding
Pattern |
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| A
statement reflecting the pattern of shareholding is attached to the Annual
Report. |
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|
On behalf of the Board |
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|
Tayyeb Afzal |
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|
Managing Director |
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| Karachi,
October 15, 1996. |
& Chief Executive |
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|
Financial Highlights |
|
|
| Year
ended June 30 |
|
1996 |
1995 |
Growth |
|
|
|
|
Rupees |
|
in % |
|
|
|
| Shareholders'
Equity |
|
1,139 m |
995 m |
14 |
|
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|
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| Profit
After Tax |
|
162 m |
135 m |
20 |
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|
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| Balance
Sheet Footings |
5,272 m |
4,599 m |
15 |
|
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| Net
Investment in Lease Finance |
3,971 m |
2,914 m |
36 |
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|
|
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| Total
Assets Leased |
|
8,080 m |
6,410 m |
26 |
|
|
|
|
|
|
|
| Lease
Income |
|
581 m |
414 m |
40 |
|
|
|
|
|
|
|
| Earnings
per Rupee 5 Share |
2.26 |
1.88 |
20 |
|
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|
| Auditors'
Report to the Members |
|
| We
have audited the annexed balance sheet of National Development Leasing
Corporation Limited |
|
| as
at June 30, 1996 and related profit and loss account and statement of changes
in financial |
|
| position,
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 together with the notes thereto
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 purpose 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 the statement of changes in financial |
|
| position, 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 |
|
| changes in financial position 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. |
|
|
|
|
Ford, Rhodes, Robson,
Morrow |
|
| Karachi,
October 23, 1996. |
|
Chartered Accountants |
|
|
|
|
Balance Sheet as at June
30, 1996 |
|
|
|
(Rupees in 000's) |
|
|
|
|
30-Jun |
Dec 31 |
|
| Capital
and Liabilities |
|
Note |
1996 |
1994 |
|
| SHARE
CAPITAL AND RESERVES |
|
|
|
Authorised Capital |
|
| 100,000,000
Ordinary Shares of Rs 5 each |
|
500,000 |
500,000 |
|
|
| Issued,
Subscribed and Paid-up Capital |
3 |
359,424 |
258,500 |
|
|
|
|
| Reserves |
|
|
|
4 |
779,998 |
687,206 |
|
|
|
-------- |
-------- |
|
| Shareholders'
Equity |
|
|
|
1,139,422 |
945,706 |
|
|
|
|
| DEFERRED
LIABILITIES |
|
| Provision
for Gratuity |
|
3,280 |
1,590 |
|
|
|
|
|
|
| LONG
TERM FINANCE AND LIABILITIES |
|
| Long
Term Finance |
|
5 |
738,150 |
794,865 |
|
| Certificates
of Investment |
|
6 |
221,528 |
257,255 |
|
| Deposits
on Lease Contracts |
|
7 |
466,988 |
289,209 |
|
|
|
|
1,426,666 |
1,341,329 |
|
| CURRENT
LIABILITIES |
|
|
|
| Short
Term Finance |
|
8 |
478,365 |
250,000 |
|
| Current
Maturity |
|
|
|
| Long
Term Finance |
|
5 |
255,951 |
180,854 |
|
| Certificates
of Investment |
|
6 |
1,533,915 |
624,464 |
|
| Deposits
on Lease Contracts |
|
7 |
48,538 |
50,218 |
|
| Accrued
Expenses and Other Liabilities |
9 |
264,715 |
167,512 |
|
| Provision
for Taxation |
|
10 |
13,286 |
44,083 |
|
| Proposed
Final Dividend |
|
|
107,827 |
38,775 |
|
|
-------- |
-------- |
|
|
2,702,597 |
1,355,906 |
|
|
|
|
| COMMITMENTS
AND CONTINGENCIES |
|
11 |
|
|
-------- |
-------- |
|
|
|
|
|
5,271,965 |
3,644,531 |
|
|
======== |
======== |
|
| The
annexed notes form an integral part of the financial statements. |
|
| The
auditors' report is annexed thereto. |
|
|
|
|
(Rupees in 000's) |
|
|
|
Note |
Jun 30 |
Dec 31 |
|
|
|
|
1996 |
1994 |
|
|
|
|
| Property
and Assets |
|
|
|
| FIXED
ASSETS |
|
12 |
56,307 |
53,278 |
|
| LONG
TERM ADVANCES |
|
13 |
12,238 |
8,776 |
|
| LONG
TERM DEPOSITS |
|
14 |
115,714 |
- |
|
| LONG
TERM INVESTMENTS |
|
15 |
49,667 |
106,108 |
|
| NET
INVESTMENT IN LEASE FINANCE |
|
16 |
2,904,723 |
1,885,322 |
|
| DEFERRED
COSTS |
|
17 |
6,120 |
2,850 |
|
| CURRENT
ASSETS |
|
| Short
Term Finance |
|
18 |
293,613 |
231,907 |
|
| Net
Investment in Lease Finance - |
|
| current
portion |
|
16 |
1,066,275 |
853,920 |
|
| Short
Term Investments |
|
19 |
353,870 |
290,832 |
|
| Income
Accrued or Due |
|
|
47,977 |
10,413 |
|
| Advances,
Deposits, Prepayments and |
|
| Other
Receivables |
|
20 |
229,154 |
101,898 |
|
| Cash
and Bank Balances |
|
21 |
136,307 |
99,227 |
|
|
-------- |
-------- |
|
|
|
|
2,127,196 |
1,588,197 |
|
|
|
|
|
|
-------- |
-------- |
|
|
5,271,965 |
3,644,531 |
|
|
======== |
======== |
|
|
|
| Profit
and Loss Account for eighteen-months ended June 30, 1996 |
|
| (Comparatives
are for the year ended December 31, 1994) |
|
|
|
|
(Rupees in 000's) |
|
|
|
Jun 30 |
Dec 31 |
|
|
|
Note |
1996 |
1994 |
|
|
| INCOME |
|
|
|
| Lease
Income |
|
|
806,810 |
398,634 |
|
| Income
from Investments/Finance |
|
22 |
252,187 |
104,904 |
|
| Other
Income |
|
23 |
56,044 |
36,818 |
|
|
|
|
|
-------- |
-------- |
|
|
|
1,115,041 |
540,356 |
|
|
|
|
|
| EXPENDITURE |
|
|
|
|
|
|
| Financial
charges/return on borrowings |
24 |
274,674 |
159,757 |
|
| Return
on Certificates of Investment |
|
366,768 |
108,529 |
|
| Administrative
and Operating Expenses |
25 |
113,086 |
48,491 |
|
|
|
-------- |
-------- |
|
|
|
754,528 |
316,777 |
|
|
|
|
-------- |
-------- |
|
| OPERATING
PROFIT BEFORE PROVISIONS |
|
360,513 |
223,579 |
|
| PROVISIONS
- Doubtful Debts |
|
34,503 |
20,834 |
|
| -
Investments - provision/write-off |
|
59,391 |
15,589 |
|
|
|
|
-------- |
-------- |
|
|
93,894 |
36,423 |
|
|
|
|
|
-------- |
-------- |
|
| PROFIT
BEFORE TAXATION |
|
266,619 |
187,156 |
|
| PROVISION
FOR TAXATION |
|
10 |
55,000 |
30,000 |
|
|
|
-------- |
-------- |
|
| NET
PROFIT AFTER TAXATION |
|
211,619 |
157,156 |
|
| UNAPPROPRIATED
PROFIT BROUGHT FORWARD |
|
983 |
89 |
|
|
|
-------- |
-------- |
|
| PROFIT
AVAILABLE FOR APPROPRIATION |
|
212,602 |
157,245 |
|
|
|
|
|
|
|
| APPROPRIATIONS |
|
| Proposed
Final Dividend 30% (1994: 15%) |
|
107,827 |
38,775 |
|
| Transfer
to General Reserve |
|
|
90,000 |
45,000 |
|
| Transfer
to Special Reserve |
|
10,580 |
7,862 |
|
| Reserve
for Issue of Bonus Shares |
|
- |
64,625 |
|
|
-------- |
-------- |
|
|
|
|
208,407 |
156,262 |
|
|
|
|
-------- |
-------- |
|
| UNAPPROPRIATED
PROFIT CARRIED FORWARD |
|
4,195 |
983 |
|
|
|
|
======== |
======== |
|
| The
annexed notes form an integral part of the financial statements. |
|
|
|
|
|
|
|
|
|
|
|
|
| Statement
of Changes in Financial Position for eighteen months ended June 30, 1996 |
|
| (Comparatives
are for the year ended December 31, 1994) |
|
|
|
|
(Rupees in 000's) |
|
|
Jun 30 |
31-Dec |
|
|
|
|
1996 |
1994 |
|
|
|
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
| Profit
before taxation |
|
266,619 |
187,156 |
|
| Adjustments to reconcile profit to net |
Add: |
|
|
|
| cash
provided by operating activities |
|
|
| Fixed
assets depreciation |
|
|
10,972 |
6,100 |
|
|
'profit on sale |
|
|
(5,053) |
(832) |
|
| Provision |
-for doubtful debts |
|
|
34.52 |
20,833 |
|
|
for gratuity |
|
|
1.69 |
655 |
|
|
for investments |
|
|
59.39 |
15,589 |
|
| Amortisation
of deferred costs |
|
|
3,041 |
993 |
|
| Income
from long term investments |
|
(38,554) |
(19,785) |
|
| Mark-up
from borrowings and return on |
|
| Certificates
of Investment |
|
|
485,246 |
267,447 |
|
|
-------- |
-------- |
|
|
|
|
551,256 |
291,000 |
|
|
-------- |
-------- |
|
|
|
|
817,875 |
478,156 |
|
| Increase
in operating assets |
|
|
(309,853) |
(239,255) |
|
| Increase
in operating liabilities |
|
325,569 |
182,747 |
|
|
-------- |
-------- |
|
|
|
|
|
|
833,591 |
421,648 |
|
| Income
tax paid |
|
|
|
(85,797) |
(21,856) |
|
|
-------- |
-------- |
|
| Net
cash generated from operating activities |
747,794 |
399,792 |
|
| CASHFLOW
FROM INVESTING ACTIVITIES |
|
| Long
Term Deposits |
|
|
(115,714) |
- |
|
| Long
Term Investments - income |
|
|
38,554 |
19,785 |
|
|
-
purchases |
|
(2,950) |
(59,274) |
|
|
|
- sale |
|
|
9,090 |
3,864 |
|
|
-
purchases |
|
(18,038) |
(44,449) |
|
|
| Investment
in lease finance (net of recoveries) |
(1,262,788) |
(416,248) |
|
| Long
term advances (net of recoveries) |
|
(4,472) |
(5,697) |
|
| Recoveries
of long term finance |
|
17,807 |
23,107 |
|
|
-------- |
-------- |
|
| Net
cash used in investing activities |
|
(1,338,511) |
(478,912) |
|
|
|
|
|
-------- |
-------- |
|
| Total
carried forward |
|
(590,717) |
(79,120) |
|
|
|
|
|
|
Statement of Changes in
Financial Position |
|
|
|
|
(Rupees in 000's) |
|
|
Jun 30 |
Dec 31 |
|
|
1996 |
1994 |
|
|
| Total
brought forward |
|
|
(590,717) |
(79,120) |
|
| CASHFLOW
FROM FINANCING ACTIVITIES |
|
| Mark-up
on borrowings/Certificates |
|
|
of Investment |
|
|
(485,246) |
(267,447) |
|
| Repayment
of long term finance |
|
|
56,606 |
187,108 |
|
| Certificates
of Investment |
|
|
873,724 |
210,486 |
|
| Deposits
from lessees - net |
|
|
176,099 |
72,020 |
|
| Issue
of share capital |
|
|
51,700 |
- |
|
| Deferred
cost |
|
|
(6, 311) |
(3,842) |
|
| Dividend
paid |
|
|
(38, 775) |
(51,699) |
|
|
-------- |
-------- |
|
| Net
Cash generated from financing activities |
627,797 |
146,626 |
|
|
|
|
======== |
======== |
|
| Net
increase in Cash |
|
|
37,080 |
67,506 |
|
| CASH
AND BANK BALANCES AT THE BEGINNING |
|
| OF
THE PERIOD |
|
|
99,227 |
31,721 |
|
|
-------- |
-------- |
|
| CASH
AND BANK BALANCES AT THE END OF THE PERIOD |
136,307 |
99,227 |
|
|
======== |
======== |
|
| S.M.
Saleem |
|
Tayyeb Afzal |
|
| Chairman |
|
Managing Director |
|
|
|
& Chief Executive |
|
|
|
| Notes
to the Financial Statemen |
