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| NETWORK
LEASING CORPORATION LIMITED |
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| Annual
Report 1996 |
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| CONTENTS |
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| Management |
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|
2 |
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| Directors'
'Report |
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|
3 |
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| Chief
Executive's Review |
|
5 |
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| Auditors'
Report |
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18 |
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| Financial
Statements |
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19 |
|
| Pattern
of Shareholding |
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31 |
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| Company
Information |
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32 |
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| Notice
of Annual General Meeting |
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33 |
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| MANAGEMENT |
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|
| Board
of Directors |
|
| Elias
A Sattar |
|
| Musaret
Siddiqi |
|
| Emile
HJ Groot |
Nominee, FMO (Netherlands
Development |
|
|
|
Finance Company) |
|
| Khurshid
Hadi |
Nominee, First Leasing
Corporation Ltd. |
|
| Yusuf
A Sattar |
|
| Dr.
Mahfooz Ali |
|
| Hanif
A Sattar |
|
| Abdul
Qayyum Bux |
|
| Asif
Siddiqi |
|
|
| Executive
Committee |
|
| Elias
A Sattar |
|
| Zaigham
M Rizvi |
Saudi Pak Industrial
& Agricultural |
|
|
|
Investment Company |
|
| Ariful
Islam |
Muslim Commercial Bank |
|
| Shahid
Shaikh |
First Leasing Corporation
Ltd. |
|
| Musaret
Siddiqi |
|
| Yusuf
A Sattar |
|
| Asif
Siddiqi |
|
|
| Management
Team |
|
| Asif
Siddiqi FCA |
Managing Director &
CEO |
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| Yusuf
A Sattar FCMA |
Executive Director-
Finance |
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| Musaret
Siddiqi FCA |
Executive Director-
Operations |
|
| Shahid
A Khan |
Marketing and Credit |
|
| Nadeem
Ahmad MBA |
Finance and Corporate
Affairs |
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| Adnan
Naseem MBA |
Client Services |
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| DIRECTORS'
REPORT |
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| TO
THE SHAREHOLDERS |
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| The
directors have pleasure in presenting to the shareholders the results and the
Annual |
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| Report
for the year ended June 30, 1996. |
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| Financials |
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| Your
directors are pleased to report an after tax profit of Rs. 10,058,139 for the |
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| year
ended June 30, 1996 and propose that profits be appropriated as under: |
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1996 |
1995 |
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|
Rupees |
Rupees |
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|
(6 Months) |
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|
| Operating
profit |
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|
10,218,933 |
3,356,738 |
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| Taxation
- current |
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|
160,794 |
873,000 |
|
|
|
|
----------- |
----------- |
|
| Profit
after tax |
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|
10,058,139 |
2,483,738 |
|
| Unappropriated
profit brought forward |
|
1,986,990 |
-- |
|
|
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|
----------- |
----------- |
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|
12,045,129 |
2,483,738 |
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| Appropriations: |
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| Transfer
to Special Reserve |
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|
2,011,628 |
496,748 |
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| Proposed
dividend @ 10% |
|
10,000,000 |
-- |
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|
----------- |
----------- |
|
| Unappropriated
profit carried forward |
|
33,501 |
1,986,990 |
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|
=========== |
=========== |
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| Auditors |
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| The
retiring auditors Messrs Ford Rhodes Robson Morrow, Chartered |
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| Accountants,
being eligible, offer themselves for re-appointment. |
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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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| Acknowledgment |
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| The
directors wish to place on record their appreciation for the hard work put in
and |
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| dedication
displayed by the staff and the management in performance of their duties. |
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| On
behalf of the Board |
|
|
| Elias
A Sattar |
|
| Chairman |
|
| Karachi. |
|
| 10
November 1996 |
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|
| These
very small farmers of this village, about 20 kilometers from Moen Jo Daro in
the |
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| interior
of Sindh, have gotten together and by sheer hard work and tenacity, are
beginning |
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| to
turn their village into a better place for living, for themselves as well as
for their future |
|
| generation. |
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| Having
an average land holding of about 10 acres and using the primitive methods of |
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| farming,
they had little hope of bettering their lives. They were persuaded by Salim
(the |
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| first
son of the village to have qualified as a lawyer) to form an association and
lease a |
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| tractor. |
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| Salim
had realized that the ever increasing demand for food due to the population |
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| pressure
could only be met by increasing the yield. In order to do so, the farmers
need to |
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| have
access to modern farming equipment and techniques. |
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| The
association has now used the tractor for about 12 months. The additional
income |
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| generated
through the use of modern techniques has put some smile on the faces of |
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| these
farmers. |
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| CHIEF
EXECUTIVE'S REVIEW |
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|
|
| Overview |
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| The
period under review is your company's first full year of commercial
operations. |
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| The
Annual Report of June 30, 1995 covered an operational period of six months |
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| from
January to June 1995. |
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| During
the year ending June 30, 1996 the lease investments grew by 55% to over |
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| Rs.
126 million and your company's after tax profit increased by over 100% to |
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| Rs.
10 million. |
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| Sponsors
& Shareholders |
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| Your
company's sponsors include Muslim Commercial Bank, Saudi Pak Industrial |
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| &
Agricultural Investment Company, FMO (Netherlands Development Finance |
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| Company),
Faysal Investment Bank, First Leasing Corporation and Industrial |
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| Development
Bank of Pakistan. |
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| In
addition, Crescent Investment Bank, Pak Libya Holding Company and National |
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| Investment
Trust hold equity in the company. The total number of individual |
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| shareholders
on June 30, 1996 was 3264. |
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| Corporate
Objectives |
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| As
stated in the previous Annual Report, this company was formed to provide
lease |
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| financing
and developmental support services to the small and micro enterprises |
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| (SME)
and the cottage and small industries (csI), as its main business. |
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| The
reason for procuring this special niche was the result of our comprehensive |
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| study
of the economic activities in the country carried out by various sectors. The |
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| surveys
quite clearly indicated that the informal small business was the most |
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| dynamic
and vibrant sector of our economy. It provides employment to almost 80% |
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| of
our working population and produces goods and services for the vast majority
of |
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| the
people. |
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| We
started with the belief that working with the SMEs and CSIs would not only be |
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| economically
viable for our company but would also strengthen the most productive |
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| and
promising sector of our economy, which works towards raising the income |
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| levels
of the people so that they may live their lives with certain amount of
dignity. |
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| We
are happy to report that our beliefs have been vindicated. We are presently |
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| Tariq
started work young at age 14. He worked his way through different tyre repair |
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| shops,
petrol stations, stores, engineering work shops and the like. Having gained
the |
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| necessary
skills in engineering work shops, he, along with this brothers started a
small |
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| repair
shop in rented premises, in a small back alley in Nital Colony with a very
small |
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| investment. |
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| The
three brothers worked diligently over the one old lathe machine, repairing
and |
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| producing
spare parts of motor cycles. As demand for their services and products grew, |
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| they
requested us to lease them a larger machine costing Rs. 40,000. This would
not |
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| only
raise their income by over 50% but also generate employment for the youngest |
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| brother,
as he was at the age of entering the job market. |
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| More
over, once the second shift starts, Tariq will need to employ two additional
workers. |
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| working
with hundreds of small and micro clients, spread over the length and breadth |
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| of
Pakistan. |
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| They
range from the small grocery store in a village run by a widow, to the home |
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| operated
art work studio run by a retired man and his two sons. |
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| It
has been the beginning of a just and equitable relationship, whereby we are |
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| providing
the clients with income generating assets and they are paying us rentals |
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| on
market based rates. In return for our respect towards our clients, they have |
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| treated
us with utmost affection. This has manifested itself in the remarkable rate |
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| of
our recoveries, which continues to be almost 100%. |
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| Leasing
Operations |
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| Initial
Steps |
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| Ours
being the first leasing company purposely formed with the objective of
financing |
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| the
small and micro enterprises, faced foreseeable problems initially, in
reaching |
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| the
target sector. |
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| Lack
of available data on micro enterprises and hence the question of |
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| identification. |
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| Mostly
such units operate from very' small premises and are not visible to |
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| the
eye. In order to avoid harassment, no outside signs are displayed. This |
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| problem
was overcome by liaising with social organisations and small |
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| business
associations in the relevant areas for specific contacts. |
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| In
business districts where micro enterprises flourish traditionally, the |
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| problem
arose because of the entrepreneurs' apprehension of a new product |
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| by
a new company. Only repeated visits by the programme officers convinced |
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| them
of the genuine nature of our leasing company, plus of course a cup of |
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| tea
at our offices. |
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| Another
common apprehension was the sudden interest by an unknown |
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| company
in providing them with finance. Since time remembered, their need |
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| was
met by the local money lender and the suppliers. Continued interface |
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| and
dialogue about the recent establishment of the leasing sector in Pakistan |
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| and
targeting of the SME's gradually for overall economic development was |
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| what
finally dispelled their initial reserve. |
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| In
certain cases there was a genuine apprehension that borrowing money |
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| on
interest was against the tenets of Islam and hence could not be endorsed. |
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| They
were explained that leasing was introduced by the government as an |
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| Islamic
mode of financing, as it involves the payment of rentals on assets |
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| leased
and as such no loan was created. |
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| Strategy
for Business Development |
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| Currently,
we have various marketing units operating in different areas. Every month, |
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| the
localities assigned to each unit are revolved. The keyword to our market |
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| approach
is our accessibility to each and every business oriented activity. Hence, |
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| no
restriction on sector, gender, activity or amount. No minimum or maximum
limits |
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| ensure
that the lease request is purely need oriented. The market approach with |
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| each
new area is to first observe and assess the business activity, formulate |
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| linkages,
establish contacts and thus having settled oneself as an environment |
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| friendly
individual, to introduce our programme. |
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| Realizing
the innovative nature of leasing with reference to the small and micro |
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| businesses
and the lack of their exposure to the formal financial sector, the |
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| relationships
are established gradually. Due emphasis is laid on Creating linkages |
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| as
it not only serves to dispel any apprehensions of the prospective clients but |
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| also
helps in the evaluation process. |
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| A
major hinderence in our activity is the lack of documentary evidence in
support |
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| of
the given business. Mostly, the micro entrepreneurs are illiterate and hence
unable |
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| to
record their transactions. Detailed scrutiny of their business activity and
in-depth |
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| questioning
leads to the formulation of their financial statements i.e. current balance |
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| sheet
and income & expenditure account for previous years as well as an |
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| assessment
of the potential cash flow. These Financials are prepared by our |
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| programme
officers with the help of interviews with the clients. The cycle is: |
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| Create
awareness ............... |
gives rise to genuine
need ....... |
processing |
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| time
................. |
correct evaluation. |
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| Emphasis
is laid on the productive nature of the asset i.e. it should either enhance |
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| the
income generation of the business or reduce its costs directly. |
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| Where
more than one asset is requested initially, prospective clients are
encouraged |
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| to
start off with one and gradually enhance their capacity as they go along. |
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| The
sectors which we are engaged in currently include, health, education,
fisheries, |
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| agriculture,
engineering, printing, garments, manufacturing, video recording, retail |
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| stores
(home & others), repair shops, distribution agents, retail kiosks and |
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| professional
work. |
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| Health
and education have been identified as the two key areas which not only |
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| effect
the present but coming generations as well. Consequently, considerable |
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| efforts
are directed towards these sectors in all lower income areas. Women and |
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| children
are the main beneficiaries in these sectors. Our portfolio includes primary |
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| schools,
high schools, technical training institutes, clinics, maternity homes and |
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| small
hospitals. |
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|
| Orangi
Town is one of the largest urban under developed area of Asia, with a
population |
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| of
over 1.2 million. Surprisingly, however the literacy rate in Orangi is about
70%, which |
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| is
much higher than the country and even Karachi city's average. |
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| The
credit for this achievement goes to the Orangi community. The determination
of the |
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| people
to provide education for their children lead to the establishment of
community |
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| based
organisations which sponsored primary and secondary schools. |
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|
| Faran
School is a classic example. Founded on 5 April 1978 in rented premises which |
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| had
to be vacated soon after. The dedicated staff and parents erected huts on an
open |
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| plot,
so as to continue with their aim of providing basic and functional education
to their |
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| children.
The school witnessed untold difficulties in its initial stages, when even
these |
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| huts
were dismantled. |
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| However
the will to survive endured. Today, Faran High School consists of 20 class |
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| rooms
with an equipped science laboratory and a computer training centre. In order
to |
|
| provide
technical education, Faran has leased equipment and computers. |
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|
| The
school has a population of over 2000 students with an almost equal ratio
between |
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| boys
and girls. It runs in two shifts. Morning for boys and afternoon for girls. |
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| Faran
Educational Society is instrumental in the spread of education in the area
through |
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| the
establishment of similar community based schools. |
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| Recoveries |
|
| Our
recoveries continue to be almost 100%. This has given us considerable
strength. |
|
| However,
our initial lease contracts have still another 2 years to go and therefore |
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| the
repayment pattern in the third year will be watched very carefully. |
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| The
instances of late payments have occurred in two areas. Some schools could |
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| not
make the repayments in time due to serious disturbances in Karachi last year |
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| and
had asked for more time. They are now making payments regularly. The other |
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| was
with the fishermen, who also have asked for more time. The reason being the |
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| exceptionally
poor fishing season for the last period i.e. September 1995 to April |
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| 1996.
The fishermen have also started making the repayments. |
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| The
entire amount of the arrears of over 3 months was under Rs. 200,000 which is |
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| 0.16%
of the total outstanding. |
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| Women
Division |
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| In
order to gain easier access and provide personalised service, the Women
Division |
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| is
being developed for serving women entrepreneurs. This Division is to be
managed |
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| by
an all female staff and has its own premises adjacent to the main offices. |
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| This
is a three tier programme: |
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| Women
with established businesses e.g. boutiques, bakeries, garments |
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| (ladies
/ children wear ), stitching units, clinics, maternity homes, schools, |
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| technical
centres, catering etc. Also professional women such as lawyers, |
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| doctors,
teachers, accountants, journalists, consultants, and others, who |
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| require
financing for assets to be used in their profession. |
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|
| Semi-skilled
women engaged in income generation activity from their homes; |
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| "The
Invisible Women". They have no access to funds for either fixed or |
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| working
capital purposes, and are at the mercy of unscrupulous money |
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| lenders.
The added burden is of the exploitative middle men who buy the |
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| goods
from such women at the rock bottom prices. The women suffer on all |
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| accounts
i.e. lack of business and marketing techniques, lack of access to |
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| formal
sector funds and direct approach to the market place. They are unable |
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| to
upgrade their skills and hence their earning capacity. |
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| For
such women, in addition to financing assets, it is essential to organize |
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| periodic
training sessions, where due emphasis is put on the necessary |
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| elements. |
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| In
this category are also placed those women who have recently acquired a |
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| particular
skill from a polytechnic or a training institution. They now have to |
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| Unable
to continue his education, Mustafa joined his father in running the small
store |
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| adjacent
to the Karachi Harbour at Kaemari. The store dealt in oils for fuel and
repair |
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| works,
to the heavy vehicle traffic there. |
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| Over
the years Mustafa learnt the trade and gradually took over the management of
the |
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| shop
from his father |
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| Being
an enterprising young man, he realized the potential in keeping a photocopy |
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| machine
at his store. This would cater to the people who had to go far for getting
copies |
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| made
of shipping documents. The additional income would come in very handy. He
thus |
|
| approached
us for leasing a photocopy machine for Rs. 45,000. |
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| Mustafa
has a smile for us, whenever we pay him a visit. |
|
|
| learn
how to actually go about employing their skill in an income generating |
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| activity. |
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| We
have so far, financed women engaged in making ice lollies, stitching |
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| garments,
embroidery works, home grocery stores, food processing and |
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| professional
work. |
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| Cases
in process include women engaged in activities ranging from making |
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| leather
waste goods, block printing, detergent making, candle making, |
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| cosmetics
and food processing. The asset cost is in the range of Rs. 5000 |
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| to
Rs. 40,000. |
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| We
are in the process of developing training programmes which will be |
|
| conducted
in various locations. The skills identified for development will be |
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| in
accordance with the needs of the local environment. |
|
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| We
feel that such programmes will serve the dual purpose of helping us to |
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| identify
and reach such women and help in the expansion and development |
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| of
their business. Likewise, we will also learn from dealing more closely with |
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| them. |
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|
| The
unskilled woman. |
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| At
the grass root level, there are innumerable unskilled women. Special |
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| efforts
will be made to attract and conduct extra training programmes for |
|
| them
on a periodic basis. They being completely new to any income |
|
| generation
activity, we will endeavour to identify simple trades, take them on |
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| market
surveys and give them some very basic training in cash management. |
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|
| Geographical
Expansion |
|
|
|
| Lahore
Office |
|
| Our
Lahore Office has been established and is now fully functional. |
|
|
| The
small enterprise sector is very active in the Punjab. Considerable economic |
|
| activity
is being carried on in the urban as well as the rural areas, especially in
and |
|
| around
Lahore, Sialkot, Gujranwala, Faislabad, Gujrat, Wazirabad and several other |
|
| places. |
|
|
| The
Lahore Office over a period of time will cater to the needs of these areas.
The |
|
| initial
response has been overwhelming but we are adopting a cautious approach |
|
| in
order to build the business gradually. |
|
|
| Peshawar
Office |
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| The
Peshawar office is under establishment and will start operation as soon as we |
|
| receive
the necessary permission from the State Bank of Pakistan. |
|
|
|
| Resource
Mobilisation |
|
| After
utilizing our own capital, we first arranged credit lines from ANZ Grindlays |
|
| Bank
and Pak Libya Holding Company. Since our normal lease period is 3 years, |
|
| we
requested the two lenders for long term funds, to which, both very
kindlyagreed. |
|
|
| In
March 1996 the Swiss Agency for Development & Cooperation (SDC), the |
|
| Government
of Switzerland extended a five year credit, for small and micro |
|
| enterprises,
with one year grace period for capital and six month's grace for mark- |
|
| up.
SDC very kindly, are also providing technical assistance over a two year
period, |
|
| for
institutional strengthening and capacity building. |
|
|
| We
have recently started negotiations with an investment bank for raising
sufficient |
|
| funds
on the basis of securitization of our receivables. The amount raised will be |
|
| adequate
for our short term needs since the average amount of our lease |
|
| disbursement
is rather modest. Negotiations are continuing with the World Bank |
|
| and
the Asian Development Bank for long term credits (upto 10 years), under their |
|
| small
and micro enterprise allocations for Pakistan. We will be entitled to
formally |
|
| apply
for these multilateral funds once we complete the first two years of
operations. |
|
|
| Human
Resource Development |
|
| Being
a service oriented institution, our main strength lies with the dedicated men |
|
| and
women who are working with us. Their well being, their professional |
|
| advancement
and development is vital for the organization's success. |
|
|
| Since
the opportunities for training to deal with small entrepreneurs are not
available |
|
| in
Pakistan, arrangements have been made through the good offices of FMO to |
|
| train
our staff in the Philippines and Indonesia. |
|
|
| Under
the technical assistance programme of SDC' our staff at various levels are |
|
| periodically
being trained at Planters Development Bank, Manila. Similar |
|
| programmes
will soon start with Bank Dagang Bali. These two very fine institutions |
|
| have
been in micro finance business for over two decades. In addition, the staff |
|
| are
trained in house on an on-going basis and are encouraged to attend the
relevant |
|
| seminars
and meetings in Pakistan. |
|
|
| Networking
with other Micorcredit related Institutions. |
|
|
| Grameen
Bank- Bangladesh |
|
| In
November 1995 we established our first contact with Grameen Bank, |
|
| when
we visited Bangladesh. |
|
|
| Professor
Mohammad Yunus, the founder of Grameen Bank, very kindly |
|
| offered
us his cooperation in familiarising us with the Grameen credit |
|
| operations.
Visits were arranged for us to study their workings in the |
|
| villages.
It was an extremely re-assuring experience to witness the |
|
| viability
of credits as small as Taka 100 (apx. Rs. 85) |
|
|
| Again
in September 1996, during the Microcredit Summit Preparatory |
|
| Meetings
in Washington, Professor Yunus re-iterated his genuine desire |
|
| to
extend to us all cooperation in the fields of credit evaluation, monitoring, |
|
| documentation
and dissemination of best practices. Grameen Bank is |
|
| also
considering the possibility of introducing the leasing instrument in |
|
| the
urban and semi urban areas of Bangladesh. |
|
|
| Women's
World Banking (WWB) |
|
| WWB
works with the UN agencies around the world for providing linkages |
|
| for
financing women enterprises. |
|
|
| They
found that our company was probably the only institution in the world |
|
| that
was using the leasing instrument for collateral free credit to the micro |
|
| enterprises. |
|
|
| In
a report prepared for UNDP on the financial instruments development |
|
| in
Africa, WWB have used Network Leasing as an example of microcredit |
|
| delivery
system. |
|
|
| Microcredit
Summit |
|
| With
the support of various governments, the UN agencies, the World Bank, |
|
| Citibank,
private associations and Grameen Bank, the first ever Microcredit Summit |
|
| is
due to be held in February 1997. The goal of the Summit is to identify and
adopt |
|
| ways
and means for providing credit for self employment to 100 million of the very |
|
| small
entrepreneurs throughout the world, by the year 2005. The estimated amount |
|
| for
such credit over the next ten years is USS 22 billion. |
|
|
| A
preparatory meeting of microcredit practioners and other institutions
connected |
|
| with
micro finance was held in Washington DC in September 1996. The purpose of |
|
| the
meeting was to get the input from all the concerned entities in order to draw
up |
|
| a
practical plan for raising the funds and reaching the 100 million micro |
|
| entrepreneurs.
The deliberations of the preparatory meeting are being documented |
|
| to
be finalised at the Summit in February 1997. |
|
|
| As
a microcredit practitioner, our company has joined the Council of
Practitioners |
|
| of
the Summit. |
|
|
| Our
endeavour at the preparatory meeting was to highlight the role that the
leasing |
|
| instrument
can play in the collateral free financing for the very small entrepreneurs. |
|
|
| A
great deal of input for the Summit goal as well as the detailed methodology
has |
|
| come
from Professor Yunus of Grameen Bank. |
|
|
| Acknowledgment
with gratitude |
|
| We
deeply value the kindness and greatly appreciate the support extended to us |
|
| by
the sponsoring institutions, the other institutional equity holders and the
lenders. |
|
| We
also acknowledge with deep gratitude the participation of the general public
in |
|
| our
venture. Our special thanks to our clients, for it is they who we owe our |
|
| operations
to and the service of whom is our objective. |
|
|
| We
take this opportunity to thank the Corporate Law Authority for their
continued |
|
| support
and understanding. Our thanks also to the State Bank of Pakistan for their |
|
| valuable
advice and guidance. |
|
|
| Asif
Siddiqi |
|
|
| Karachi. |
|
| 10
November 1996 |
|
|
| F
I N A N C I A L S |
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
| We
have audited the annexed balance sheet of Network Leasing Corporation |
|
| Limited
as at June 30, 1996 and the related profit and loss account and statement |
|
| of
changes in financial position, together with the notes forming part thereof,
for |
|
| the
year 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 the profit and loss account 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 the accounting policies |
|
| consistently
applied, except for the change as stated in note 2.2 with |
|
| which
we concur; |
|
|
|
| (ii)
the expenditure incurred during the year was for the purpose of the |
|
| company's business; and |
|
|
| (iii)
the business conducted, investments made and the expenditure |
|
| incurred
during the year 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
and 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 year
then ended; and |
|
|
| (d)
in our opinion, no Zakat was deductible at source under the Zakat and Ushr |
|
| Ordinance,
1980. |
|
|
| Ford
Rhodes Robson Morrow |
|
| Chartered
Accountants |
|
|
| Karachi |
|
| October
30, 1996 |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 1996 |
|
|
|
Note |
1996 |
1995 |
|
|
|
|
Rupees |
Rupees |
|
| Assets |
|
|
| Operating
Fixed Assets-Tangible |
|
3 |
12,684,301 |
3,644,298 |
|
|
|
| Investment
in Leases |
|
| Minimum
lease payments receivable |
|
|
153,524,895 |
91,450,135 |
|
| Residual
value of leased assets |
|
|
13,220,733 |
6,180,467 |
|
|
|
|
------------------------ |
|
|
|
|
166,745,628 |
97,630,602 |
|
| Unearned
finance income |
|
|
(40,487,500) |
(27,360,042) |
|
|
|
|
------------------------ |
|
| Net
investment in leases |
|
|
126,258,128 |
70,270,560 |
|
| Current
portion of net investment in leases |
|
(31,199,994) |
(12,078,756) |
|
|
|
|
------------------------ |
|
|
|
|
95,058,134 |
58,191,804 |
|
| Less:
provision for potential lease losses |
4 |
(631,290) |
-- |
|
|
|
|
------------------------ |
|
|
|
|
94,426,844 |
58,191,804 |
|
| Long
Term Deposits and Prepayments |
5 |
195,665 |
235,750 |
|
| Deferred
Costs |
|
6 |
4,843,195 |
5,557,628 |
|
| Current
Assets |
|
|
| Current
portion of net investment in leases |
|
31,199,994 |
12,078,756 |
|
| Short
term investments |
|
7 |
10,700,000 |
24,300,000 |
|
| Short
term finance |
|
8 |
-- |
5,000,000 |
|
| Advances,
deposits, prepayments and |
|
| other
receivables |
|
9 |
3,209,202 |
1,956,680 |
|
| Cash
and bank balances |
|
10 |
10,632,379 |
3,845,992 |
|
|
|
|
------------------------ |
|
|
|
|
55,741,575 |
47,181,428 |
|
|
|
|
|
|
|
|
|
------------------------ |
|
|
|
|
167,891,580 |
114,810,908 |
|
|
|
|
============ |
============ |
|
| Capital
and Reserves |
|
|
| Authorised |
|
|
|
| 20,000,000
(1 995: 10,000,000)ordinary shares |
200,000,000 |
100,000,000 |
|
|
|
|
============ |
============ |
|
| of
Rs. 10 each |
|
|
| Issued,
subscribed and paid-up capital |
11 |
100,000,000 |
100,000,000 |
|
| Reserves |
|
|
12 |
2,541,877 |
2,483,738 |
|
|
|
|
------------------------ |
|
|
|
|
102,541,877 |
102,483,738 |
|
|
| Long
Term Finance |
|
13 |
31,828,968 |
-- |
|
| Obligation
Under Finance Lease |
|
14 |
251,032 |
102,550 |
|
| Long
Term Deposits |
|
15 |
12,281,317 |
5,599,886 |
|
|
|
|
|
|
|
| Current
Liabilities |
|
|
| current
portion of long term finance |
|
6,921,032 |
-- |
|
| urgent
portion of obligation under finance lease |
168,456 |
37,676 |
|
| Creditors, accrued expenses and |
|
|
|
|
| other
liabilities |
|
16 |
3,641,884 |
6,079,187 |
|
| Provision
for taxation - net |
|
|
257,014 |
507,871 |
|
| Proposed
dividend |
|
|
10,000,000 |
-- |
|
|
|
|
------------------------ |
|
|
|
|
20,988,386 |
6,624,734 |
|
| Contingencies
and Commitments |
|
17 |
|
|
|
|
------------------------ |
|
|
|
|
167,891,580 |
114,810,908 |
|
|
|
|
============ |
============ |
|
|
| The
annexed notes form an integral part of these accounts |
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 1996 |
|
|
Note |
1996 |
1995 |
|
|
|
|
Rupees |
Rupees |
|
|
|
|
(6 Months) |
|
|
| Income |
|
| Income
from leasing operations |
|
18 |
19,651,511 |
1,496,976 |
|
| Other
Income |
|
19 |
3,531,323 |
5,731,116 |
|
|
|
|
------------------------ |
|
|
|
|
23,182,834 |
7,228,092 |
|
|
|
|
| Expenditure |
|
|
| Administrative
and operating expenses |
20 |
9,274,754 |
3,244,853 |
|
| Amortization
of deferred costs |
|
|
1,785,226 |
617,514 |
|
| Financial
charges |
|
21 |
1,272,631 |
8,987 |
|
| Provision
for potential lease losses |
|
631,290 |
-- |
|
|
|
|
------------------------ |
|
|
|
|
12,963,901 |
3,871,354 |
|
|
|
|
|
|
|
|
|
|
|
------------------------ |
|
| Operating
profit for the year |
|
|
10,218,933 |
3,356,738 |
|
| Taxation
- current |
|
22 |
160,794 |
873,000 |
|
|
|
|
------------------------ |
|
| Profit
for the year |
|
|
10,058,139 |
2,483,738 |
|
| Unappropriated
profit brought forward |
|
1,986,990 |
-- |
|
|
|
|
------------------------ |
|
| Profit
available for appropriation |
|
12,045,129 |
2,483,738 |
|
| Appropriations |
|
|
| Transfer
to special reserve |
|
|
2,011,628 |
496,748 |
|
| Proposed
dividend @ 10% (1995: NIL) |
|
10,000,000 |
-- |
|
|
|
|
------------------------ |
|
| Unappropriated
profit carried forward |
|
33,501 |
1,986,990 |
|
|
======================== |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| (CASH
FLOW STATEMENT) |
|
| FOR
THE YEAR ENDED JUNE 30, 1996 |
|
|
1996 |
1995 |
|
|
|
|
Rupees |
Rupees |
|
|
|
|
|
(6 Months) |
|
|
|
|
| Cash
flows from operating activities |
|
|
| Profit
before taxation |
|
10,218,933 |
3,356,738 |
|
| Adjustment
for |
|
|
| Depreciation |
|
864,704 |
254,053 |
|
| Amortization
of deferred costs |
|
1,785,226 |
617,514 |
|
| Provision
for potential lease losses |
|
631,290 |
-- |
|
|
|
------------------------ |
|
| Profit
before working capital changes |
|
13,500,153 |
4,228,305 |
|
|
|
|
|
|
| Decrease/(increase)
in short term investments |
13,600,000 |
(4,000,000) |
|
| Decrease/(increase)
in short term finance |
|
5,000,000 |
(5,000,000) |
|
| (Increase)
in short term advances, deposits, |
|
|
|
| prepayments
and other receivables |
|
(1,252,522) |
(1,685,142) |
|
| Increase
in current portion of obligation |
|
|
| under
finance lease and tong term finance |
|
7,051,812 |
37,676 |
|
| (Decrease)/increase
in creditors, accrued and |
|
| other
liabilities |
|
(2,437,303) |
6,059,187 |
|
|
|
------------------------ |
|
| Cash
generated from operations |
|
35,462,140 |
(359,974) |
|
| Income tax |
|
|
|
(411,651) |
(365,129) |
|
|
|
|
|
------------------------ |
|
| Net
cash from operating activities |
|
35,050,489 |
(725,103) |
|
|
|
------------------------ |
|
| Cash
flows from investing activities |
|
|
| Purchase
of fixed assets |
|
(9,904,707) |
(3,627,251) |
|
| Net
investment in leases (net of repayments) |
|
(55,987,568) |
(70,270,560) |
|
|
|
------------------------ |
|
| Net
cash used in investing activities |
|
(65,892,275) |
(73,897,811) |
|
|
|
------------------------ |
|
| Cash
flow from financing activities |
|
|
| Long
term deposits and prepayments |
|
40,085 |
(235,750) |
|
| Deferred
costs |
|
|
(1,070,793) |
(3,896,789) |
|
| Long
term deposits |
|
|
6,681,431 |
5,599,886 |
|
| Obligation
under finance lease |
|
148,482 |
102,550 |
|
| Long
term finance |
|
31,828,968 |
-- |
|
| Proceeds
from issuance of share capital |
|
-- |
66,000,000 |
|
|
|
|
|
------------------------ |
|
| Net
cash from financing activities |
|
37,628,173 |
67,569,897 |
|
|
|
------------------------ |
|
|
|
|
| Net
increase/(decrease)in cash |
|
6,786,387 |
(7,053,017) |
|
| Cash
at beginning of the year |
|
3,845,992 |
10,899,009 |
|
|
|
------------------------ |
|
| Cash
at end of the year |
|
10,632,379 |
3,845,992 |
|
|
|
======================== |
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE YEAR ENDED JUNE 30, 1996 |
|
|
| 1.
The Company and its Operations |
|
|
|
| The
company was incorporated on August 19, 1993. Commercial operation |
|
| effectively
began in January 1995. The company is listed on the Karachi, Lahore |
|
| and
Islamabad Stock Exchanges and is principally engaged in lease financing |
|
| of assets. |
|
|
|
| 2.
Significant Accounting Policies |
|
|
|
|
| 2.1
Accounting Convention |
|
| These
accounts have been prepared under historical cost convention. |
|
|
|
| 2.2
Revenue Recognition |
|
|
|
|
| Lease
income |
|
| The
company follows the financing method in accounting for recognition |
|
| of
lease income. Under this method the unearned lease income, that is |
|
| the
excess of aggregate lease rental and estimated residual value over |
|
| the
cost of leased asset, is taken to income over the term of lease. However |
|
| from
the current year, to more accurately match income and expenditure, |
|
| a
portion of unearned lease income approximating the costs incurred in |
|
| writing
the lease, is taken to "income from leasing" at the time of
execution |
|
| of
the lease. The remainder of unearned lease income is taken to income |
|
| over
the term of the lease, so as to produce a systematic return on net |
|
| investment
in leases. Income pertaining to the periods falling between |
|
| rentals
due and the year end is recognised on an accrual basis (See note |
|
| 2.9) |
|
|
|
| Other
income |
|
| Return
on bank deposits, advances to financial institutions, certificates |
|
| of
investments, front end fees and documentation charges are recognized |
|
| on
an accrual basis. |
|
|
|
| 2.3
Taxation |
|
| Current |
|
| Income
for the purpose of computing current taxation is determined under |
|
| the
provisions of tax law whereby lease income received or receivable |
|
| are
deemed to be income. Provision for taxation is thus based on income |
|
| determined
in accordance with the requirements of the tax law. |
|
|
| Deferred |
|
| The
company accounts for deferred taxation using the liability method on |
|
| timing
differences arising from using different methods in the recognition |
|
| of
lease income for tax and accounting purposes, as well as for all other |
|
| significant
timing differences. However, deferred taxation is not provided |
|
| if
it can be established with reasonable probability that these timing |
|
| differences
will not reverse in the foreseeable future. |
|
|
|
| 2.4
Fixed Assets and Depreciation |
|
| Owned |
|
| Fixed
assets are stated at cost less accumulated depreciation. |
|
| Depreciation
is charged to income applying the straight line method, |
|
| whereby
the cost of an asset is written-off over its useful life at the rates |
|
| specified
in the note 3 to the accounts. Major renewals during the year |
|
| are
capitalised. |
|
|
|
| Leased |
|
| Fixed
assets acquired through finance lease are included as tangible fixed |
|
| assets.
The outstanding obligation under lease, less finance charges |
|
| allocated
to future periods are shown as a liability. The financial charge is |
|
| calculated
at the mark-up rate implicit in the lease. Depreciation is charged |
|
| at
the rates which are used for the owned assets. |
|
|
|
| 2.5
Deferred Costs |
|
| Deferred
costs are amortized over a period of five years from the period |
|
| of
their incurrance, except for arrangement fees for leases which are |
|
| amortized
over the term of the lease. |
|
|
|
| 2.6
Provision for Potential Lease Losses |
|
| The
provision for potential lease losses is maintained at a level which, in |
|
| the
judgement of the management, is adequate to provide for potential |
|
| losses
on lease portfolio that can be reasonably anticipated. |
|
|
|
| 2.7
Staff Retirement Benefits |
|
| The
company operates a contributory provident fund for all its confirmed |
|
| employees.
Contributions are made by the company and the employees |
|
| in
accordance with the rules of the fund. |
|
|
|
|
| 2.8
Short Term Investments |
|
| These
are stated at lower of cost and market value. |
|
|
|
|
| 2.9
Effects of Change in Accounting Policies |
|
| The
net effect of change shown in note 2.2 above has been to increase |
|
| the
current year's proht by Rs. 2,506,928 |
|
|
|
|
| 3.
Operating Fixed Assets-Tangible |
|
|
|
|
|
|
|
cost as at |
Additions |
Cost as at |
Accumulated |
Written |
|
Depreciation |
|
|
|
July 1, |
during the |
June 30, |
depreciation |
down value |
Rate |
charge |
|
|
|
1995 |
year |
1996 |
as at |
as at |
% |
for the |
|
|
|
|
Year |
|
|
|
June 30,1996 June 30,
1996 |
|
|
|
|
|
Rupees |
Rupees |
Rupees |
Rupees |
Rupees |
|
Rupees |
|
|
|
|
| Owned |
|
| Office
Premises |
-- |
7,568,885 |
7,560,885 |
59,750 |
7,500,335 |
2.50 |
59,750 |
|
| Furniture
& Fixtures |
1,222,420 |
454,347 |
1,676,767 |
204,268 |
1,472,499 |
10 |
143,147 |
|
| Leasehold
Improvements |
690,020 |
-- |
690,020 |
103,503 |
586,517 |
10 |
69,002 |
|
| Computers |
|
221,300 |
394,875 |
616,175 |
89,442 |
526,733 |
20 |
78,377 |
|
| Office
Equipment |
433,399 |
24,950 |
458,349 |
65,797 |
392,552 |
10 |
44,127 |
|
| Motor
Vehicles |
1,182,712 |
1,055,600 |
2,238,312 |
493,083 |
1,745,229 |
20 |
374,812 |
|
|
------------ |
------------ |
------------ |
------------ |
------------ |
------------ |
------------ |
| Sub Total |
|
3,749,851 |
9,489,857 |
13,239,708 |
1,015,843 |
12,223,865 |
|
769,215 |
|
|
| Leased |
|
| Equipment |
|
148,500 |
-- |
148,500 |
22,275 |
126,225 |
10 |
14,850 |
|
| Computers |
|
-- |
139,850 |
139,850 |
25,639 |
114,211 |
20 |
25,639 |
|
| Motor
Vehicles |
-- |
275,000 |
275,000 |
55,000 |
220,000 |
20 |
55,000 |
|
|
------------ |
------------ |
------------ |
------------ |
------------ |
------------ |
------------ |
|
1996 |
3,898,351 |
9,904,707 |
13,803,058 |
1,118,757 |
12,684,301 |
|
864,704 |
|
|
|
=========== |
=========== |
=========== |
=========== |
=========== |
=========== |
=========== |
|
1995 |
271,100 |
3,627,251 |
3,898,351 |
254,053 |
3,644,298 |
|
254,053 |
|
|
=========== |
=========== |
=========== |
=========== |
=========== |
=========== |
=========== |
|
|
| 4.
Provision for Potential Lease Losses |
|
|
| Provision
for potential lease losses is made in accordance with the accounting policies |
|
| stated
in note 2.6 for the current year. However, in accordance with the State Bank |
|
| of
Pakistan prudential regulations governing Non-Banking Financial Institutions,
there |
|
| were
no bad or doubtful debts as at June 30,1996. |
|
|
|
|
|
|
1996 |
1995 |
|
|
|
|
Rupees |
Rupees |
|
| 5.
Long Term Deposits and Prepayments |
|
|
| Security
deposits |
|
|
111,080 |
-- |
|
| Lease
key money |
|
|
56,335 |
14,850 |
|
| Other
deposits |
|
|
28,250 |
20,900 |
|
| Prepayments |
|
|
-- |
200,000 |
|
|
|
|
------------ |
------------ |
|
|
|
|
195,665 |
235,750 |
|
|
|
|
============ |
============ |
|
| 6.
Deferred Costs |
|
|
|
|
|
| Registration
fee and company formation expenses |
315,840 |
165,840 |
|
| Equity
placement, arrangement and administration fee |
585,628 |
585,628 |
|
| Underwriters'
commission |
|
|
1,928,850 |
1,928,850 |
|
| Brokers'
and bankers' commission |
|
|
752,614 |
753,379 |
|
| Share
issue expenses |
|
|
1,507,180 |
1,507,180 |
|
| Net
pre-operating expenses |
|
|
1,234,265 |
1,234,265 |
|
| Arrangement
fee for leases |
|
|
921,558 |
-- |
|
|
|
|
------------ |
------------ |
|
|
|
|
7,245,935 |
6,175,142 |
|
| Amortization
-todate |
|
|
(2,402,740) |
(617,514) |
|
|
|
|
------------ |
------------ |
|
|
|
|
4,843,195 |
5,557,628 |
|
|
|
|
============ |
============ |
|
|
| The
above costs have been carried forward as it confers the benefit of the same
to |
|
| future
years. |
|
|
|
|
1996 |
1995 |
|
|
|
|
Rupees |
Rupees |
|
| 7.
Short Term Investments |
|
|
| Government
securities |
|
7.1 |
700,000 |
700,000 |
|
| Certificates
of deposit |
|
7.2 |
10,000,000 |
23,600,000 |
|
|
|
|
------------ |
------------ |
|
|
|
|
10,700,000 |
24,300,000 |
|
|
|
|
============ |
============ |
|
|
|
|
| 7.1
This represents federal investment bonds which have been purchased to |
|
| comply with the relevant provisions of the
State Bank of Pakistan for |
|
| Non-Banking Financial Institution. The rate
of return on the above is 15% per |
|
| annum. |
|
|
| 7.2
These represent certificates of deposit issued by PICIC with a rate of return |
|
| at
13% per annum. |
|
|
| 8.
Short Term Finance - Considered good |
|
-- |
5,000,000 |
|
|
============ |
============ |
|
|
|
|
1996 |
1995 |
|
|
|
Rupees |
Rupees |
|
|
|
| 9.
Advances, Deposits, Prepayments and |
|
| Other
Receivables |
|
|
|
|
| Advances
- Unsecured, Considered good |
|
| Professional
fee |
|
-- |
5,000 |
|
| To
staff for expenses |
|
207,109 |
1,000 |
|
| Deposits |
|
|
|
1,250 |
1,250 |
|
| Prepayments |
|
|
930,876 |
407,363 |
|
|
|
|
| Other
Receivables |
|
|
|
| Accrued
income/return on |
|
|
|
| --
Short term investments |
|
|
211,652 |
464,638 |
|
| --
Deposit accounts |
|
|
|
264,767 |
531,041 |
|
| --
PLS accounts |
|
|
|
500,055 |
355,277 |
|
| Reimbursible
expenses |
|
9.1 |
1,037,961 |
-- |
|
| Others |
|
|
|
|
55,532 |
191,111 |
|
|
|
|
------------ |
------------ |
|
|
|
3,209,202 |
1,956,680 |
|
|
============ |
============ |
|
|
| 9.1
This represents amount recoverable on account of small and micro |
|
| enterprise
training and development cost. |
|
|
|
|
|
1996 |
1995 |
|
|
|
|
Rupees |
Rupees |
|
| 10.
Cash and Bank Balances |
|
|
| At banks |
|
|
| --
in current accounts |
|
|
100,614 |
1,326,778 |
|
| --in
PLS accounts |
|
|
6,480,603 |
2,503,506 |
|
| --in
special account with SBP |
|
|
50,000 |
-- |
|
| Deposit
account with a financial institution |
|
4,000,000 |
-- |
|
| Cash
in hand |
|
|
1,162 |
15,708 |
|
|
|
|
------------ |
------------ |
|
|
|
|
10,632,379 |
3,845,992 |
|
|
============ |
============ |
|
|
| 11.
Issued, Subscribed and Paid-up Capital |
|
|
|
|
| 10,000,000
(1995: 10,000,000) ordinary shares 100,000,000 100,000,000 |
|
| of
Rs. 10 each fully paid in cash |
|
|
| Under
the terms of the loan agreement, SDC shall have an option to convert at |
|
| any
time during the period of five years from the date of full disbursement of
the |
|
| loan
an aggregate amount of upto Rs. 10,000,000 of the principal amount of the |
|
| loan
into fully paid-up shares of the company ranking pari passu in all respects |
|
| with
the shares already issued by the company at the time of the exercise of the |
|
| option.
In terms of the investment, the shares are to be issued to SDC, at the |
|
| break-up
value per share of the company at the time when the option for conversion |
|
| is
exercised by SDC. (See note 13.1) |
|
|
|
|
|
1996 |
1995 |
|
|
|
|
Rupees |
Rupees |
|
| 12.
Reserves |
|
|
| Capital
reserve |
|
| Special
reserve |
|
12.1 |
|
|
| Balance
at beginning of the year |
|
|
496,748 |
-- |
|
| Transfered
from profit and loss account |
|
2,011,628 |
496,748 |
|
|
|
|
------------ |
------------ |
|
| Balance
at end of the year |
|
|
2,508,376 |
496,748 |
|
| Revenue
reserve |
|
|
| Unappropriated
profit |
|
|
33,501 |
1,986,990 |
|
|
|
|
------------ |
------------ |
|
|
|
|
2,541,877 |
2,483,738 |
|
|
|
|
============ |
============ |
|
|
| 12.1
The special reserve represents profit set aside as required under the |
|
| relevant provision of State Bank of
Pakistan rules for Non-Banking |
|
| Financial Institutions. |
|
|
| 13.
Long Term Finance |
|
|
| Swiss
Agency for Development and |
|
13.1 |
22,500,000 |
-- |
|
| Cooperation.
(SDC) |
|
|
|
|
|
| Pak
Libya Holding Company (Pvt.) Ltd. |
13.2 |
10,000,000 |
-- |
|
| ANZ
Grindlays Bank plc. |
|
13.3 |
6,250,000 |
-- |
|
|
|
|
------------ |
------------ |
|
|
|
|
38,750,000 |
-- |
|
|
|
|
|
|
| Less:
Current portion |
|
(6,921,032) |
-- |
|
|
|
|
------------ |
------------ |
|
|
|
31,828,968 |
-- |
|
|
|
|
============ |
============ |
|
|
| 13.1
The above loan has been obtained from a development agency specifically |
|
| for small and micro enterprises, at a
mark-up rate of 14% per annum. The |
|
| loan is secured by charge on leased assets
and is repayable in eight |
|
| semi-annual equal instalments commencing
from March 15, 1997. Swiss |
|
| agency for Development and Cooperation has
the option to convert part of |
|
| its loan into equity as explained in note
11. |
|
|
| 13.2
The above loan has been obtained from a financial institution at a mark- up |
|
| rate of 20% per annum. The loan is secured
by charge on leased assets and |
|
| is repayable in fourteen unequal quarterly
instalments commencing from |
|
| October 15, 1996. |
|
|
| 13.3
The above loan has been obtained from a bank at a mark- up rate of 17% per |
|
| annum. The loan is secured by charge on
leased assets and is repayable in |
|
| six semi-annual equal instalments
commencing from May 13, 1996. |
|
|
| 14.
Obligation Under Finance Lease |
|
|
| 14.1
These obligations represent acquisition of equipment under finance lease |
|
| facility. The rate of mark- up implicit in
the lease payments is 21% per annum |
|
| and is payable in equal monthly
instalments. |
|
|
|
| 14.2
The aggregate future minimum lease payments to which the company is committed |
|
| under the lease agreement and the period in
which they will become due are as |
|
| follows: |
|
|
|
|
|
|
1996 |
1995 |
|
|
|
|
Rupees |
Rupees |
|
|
|
|
|
|
|
| Years
ending June 30 |
|
| 1996 |
|
|
-- |
60,144 |
|
| 1997 |
|
|
226,092 |
60,144 |
|
| 1998 |
|
|
253,406 |
59,958 |
|
| 1999 |
|
|
18,629 |
-- |
|
|
|
|
------------ |
------------ |
|
|
|
|
498,127 |
180,246 |
|
|
|
|
(78,639) |
(40,020) |
|
|
|
|
------------ |
------------ |
|
|
|
|
419,488 |
140,226 |
|
|
|
|
(168,456) |
(37,676) |
|
|
------------ |
------------ |
|
|
|
251,032 |
102,550 |
|
|
|
============ |
============ |
|
| 15.
Long Term Deposits |
|
|
|
|
| These
represent security deposits received against lease contracts and are
repayable/ |
|
| adjustable
at the expiry/termination of the respective leases. There are no maturities
of |
|
| these
deposits within the next year. |
|
|
| 16.
Creditors, Accrued Expenses and |
|
| Other
Liabilities |
|
|
| Sundry
creditors |
|
16.1 |
223,692 |
3,174,794 |
|
| Withholding
tax payable |
|
|
105,199 |
670,287 |
|
| Lease
rentals received in advance |
|
|
2,699,576 |
2,119,827 |
|
| Finance
charges on long term finance - secured |
421,918 |
-- |
|
| Provident
Fund payable · |
|
|
53,710 |
40,454 |
|
| Other
Liabilities |
|
|
137,789 |
73,825 |
|
|
|
|
------------ |
------------ |
|
|
|
|
3,641,884 |
6,079,187 |
|
|
============ |
============ |
|
|
|
|
| 16.1
These include an amount of Rs. 187,127 (1995: Rs. 2,992,394) due to a |
|
| lessee. |
|
|
| 17.
Contingencies and Commitments |
|
|
|
| Contingencies |
|
| In
finalising the Corporation's assessment for the assessment year 1995-96 the
Income |
|
| Tax
Officer disallowed certain expenses resulting in an additional tax liability
of Rs. |
|
| 549,371.
The Company has filed an appeal before Commissioner of Income Tax. No |
|
| provision
has been made for the additional liability in these accounts as the
management |
|
| anticipates
a favourable outcome. |
|
|
| Commitments |
|
|
|
|
1996 |
1995 |
|
|
|
|
Rupees |
Rupees |
|
|
|
|
| for
lease financing |
|
|
2,853,663 |
468,000 |
|
|
|
============ |
============ |
|
|
|
1996 |
1995 |
|
|
Rupees |
Rupees |
|
|
|
|
(6 Months) |
|
|
|
| 18.
Income From Leasing Operation |
|
|
| Income
from lease contracts |
|
|
19,058,918 |
1,094,457 |
|
| Front
end fee |
|
|
530,377 |
402,519 |
|
| Commitment
charges |
|
62,216 |
-- |
|
|
|
------------ |
------------ |
|
|
|
|
19,651,511 |
1,496,976 |
|
|
============ |
============ |
|
| 19.
Other Income |
|
|
|
| Return
on deposit accounts |
|
|
264,767 |
2,679,645 |
|
| Return
on PLS accounts |
|
|
760,443 |
373,702 |
|
| Return
on short term investments |
|
|
2,189,861 |
1,734,553 |
|
| Return
on short term finances |
|
19.10 |
76,027 |
735,616 |
|
| Gain
on sale of shares |
|
|
189,000 |
207,600 |
|
| Gain
on exchange |
|
|
51,225 |
-- |
|
|
|
|
------------ |
------------ |
|
|
|
|
3,531,323 |
5,731,116 |
|
|
============ |
============ |
|
|
|
|
| 19.1
This represents income earned on a musharika arrangement with an |
|
| associated undertaking. |
|
|
| 20.
Administrative and Operating Expenses |
|
|
| Salaries
and benefits |
|
|
5,291,160 |
1,977,725 |
|
| Staff
welfare |
|
|
16,319 |
66,397 |
|
| Rent,
rates and taxes |
|
|
287,454 |
155,150 |
|
| Travelling
and conveyance |
|
|
227,372 |
162,408 |
|
| Vehicle
running expenses |
|
|
493,061 |
134,310 |
|
| Utilities |
|
|
295,172 |
117,612 |
|
| Entertainment |
|
|
176,329 |
41,369 |
|
| Subscriptions |
|
|
141,874 |
42,908 |
|
| Printing
and stationery |
|
|
298,936 |
64,985 |
|
| Postage
and courier |
|
|
57,816 |
19,583 |
|
| Legal
and professional charges |
|
|
222,825 |
64,692 |
|
| Auditors'
remuneration |
|
20.1 |
105,544 |
45,642 |
|
| Office
repairs and maintenance |
|
|
99,246 |
36,602 |
|
| Advertisement
and promotional expenses |
|
59,650 |
37,458 |
|
| Insurance |
|
|
43,467 |
1,000 |
|
| Depreciation |
|
|
864,704 |
254,053 |
|
| Direct
cost of leases |
|
|
454,273 |
15,336 |
|
| Other
expenses |
|
|
139,552 |
7,623 |
|
|
|
|
------------------------ |
|
|
|
20.2 |
9,274,754 |
3,244,853 |
|
|
|
|
======================== |
|
| 20.1
Auditors' Remuneration |
|
| Audit fee |
|
|
|
50,000 |
30,000 |
|
| Statutory
audit fee |
|
|
-- |
10,000 |
|
| Special
audit fee |
|
|
35,000 |
-- |
|
| Tax
consultancy |
|
|
|
| Out
of pocket expenses |
|
6,794 |
642 |
|
| Other
services |
|
|
2,750 |
5,000 |
|
|
|
------------------------ |
|
|
|
105,544 |
45,642 |
|
|
======================== |
|
|
|
| 20.2
These are stated net of Rs. 2,400,000 (1995: NIL) already reimbursed and |
|
| Rs. 437,961 (1995: NIL) to be reimbursed on
account of small and micro |
|
| enterprise training and development cost. |
|
|
|
|
|
1996 |
1995 |
|
|
|
Rupees |
Rupees |
|
|
|
| 21.
Financial Charges |
|
| Mark-up
on long term finance |
|
|
1,172,398 |
-- |
|
| Mark-up
on finance lease |
|
|
85,854 |
6,762 |
|
| Bank
charges and commission |
|
|
14,379 |
2,225 |
|
|
|
------------------------ |
|
|
|
21.1 |
1,272,631 |
8,987 |
|
|
======================== |
|
|
|
|
| 21.1
These are stated net of Rs. 600,000 (1995: NIL) recoverable on account of |
|
| small and micro enterprise training and
development cost. |
|
|
|
| 22.
Taxation |
|
| Provision
for current taxation for the current year has been made on the basis of |
|
| minimum
tax under Section 80 D of the Income Tax Ordinance, 1979. |
|
|
| Deferred
taxation arisingdue to timing difference computed under the liability |
|
| method
is estimated at Rs. 12.960 million (1995: Rs. 8.736 million) of which |
|
| Rs.
4.952 million (1995: Rs. 8.736 million) is in respect of the current year. |
|
|
|
|
| The
liability for deferred taxation is not likely to reverse in the foreseeable
future |
|
| and
accordingly, no provision for deferred taxation has been made in these |
|
| accounts. |
|
|
|
|
|
| 23.
Remuneration of the Chief Executive and the Executives |
|
|
|
|
| The
aggregate amount of expenditure included in the accounts for the year in
respect |
|
| of
remuneration, including benefits to the Chief Executive and Executives of the |
|
| company
are as follows: |
|
|
|
|
|
|
|
1996 |
|
1995 |
|
|
|
|
|
|
|
Chief |
|
|
Chief |
|
|
|
Executive |
Executives |
Total |
Executive |
Executives |
Total |
|
|
|
|
|
Rupees |
Rupees |
Rupees |
Rupees |
Rupees |
Rupees |
|
|
| Managerial Remuneration |
648,000 |
1,723,723 |
2,371,723 |
648,000 |
960,000 |
1,608,000 |
|
| Allowances |
|
312,000 |
848,100 |
1,160,100 |
338,997 |
483,366 |
822,363 |
|
| Contributory Provident Fund |
64,800 |
169,590 |
234,390 |
16,200 |
36,000 |
52,200 |
|
|
----------- |
----------- |
----------- |
----------- |
----------- |
----------- |
|
|
|
1,024,800 |
2,741,413 |
3,766,213 |
1,003,197 |
1,479,366 |
2,482,563 |
|
|
=========== |
=========== |
=========== |
=========== |
=========== |
=========== |
| Number
of Persons |
|
1 |
5 |
6 |
1 |
3 |
4 |
|
|
| The
Chief Executive and the Executives are entitled to use company maintained |
|
| cars,
and are covered for medical and life insurance. No remuneration was paid to |
|
| directors
for attending board meetings. |
|
|
|
|
1996 |
1995 |
|
|
Rupees |
Rupees |
|
| 24.
Transactions With Associated Undertaking |
|
|
| Purchase
of office equipment |
|
-- |
136,000 |
|
| Investment
income receivable |
|
-- |
365,753 |
|
| Recoverable
expenses |
|
|
-- |
44,899 |
|
| Short
term finance |
|
|
-- |
10,000,000 |
|
| Return
on short term finance |
|
76,027 |
735,616 |
|
| Arrangement
fee |
|
|
209,552 |
-- |
|
|
| 25.
General |
|
|
| 25.1
Previous year figures have been rearranged wherever necessary for the |
|
| purpose of comparison. |
|
|
| 25.2
Figures have been rounded off to the nearest rupee. |
|
|
| PATTERN
OF SHAREHOLDING AS AT JUNE 30 1996 |
|
|
| Number |
|
|
Share |
|
Total |
|
| of |
|
|
holding |
|
Shares |
|
| Shareholders |
From |
|
To |
Held |
|
|
|
|
| 48 |
|
1 |
-- |
100 |
4,800 |
|
| 3497 |
|
101 |
-- |
500 |
1,747,700 |
|
| 25 |
|
501 |
-- |
1000 |
23,800 |
|
| 21 |
|
1001 |
-- |
5000 |
70,500 |
|
| 15 |
|
5001 |
-- |
10000 |
139,200 |
|
| 2 |
|
10001 |
-- |
15000 |
25,700 |
|
| 7 |
|
15001 |
-- |
20000 |
120,500 |
|
| 1 |
|
30001 |
-- |
35000 |
31,200 |
|
| 2 |
|
40001 |
-- |
45000 |
87,500 |
|
| 4 |
|
45001 |
-- |
50000 |
200,000 |
|
| 1 |
|
60001 |
-- |
65000 |
61,000 |
|
| 1 |
|
95001 |
-- |
100000 |
100,000 |
|
| 2 |
|
245001 |
-- |
253000 |
500,000 |
|
| 1 |
|
495001 |
-- |
500000 |
500,000 |
|
| 1 |
|
535001 |
-- |
540000 |
539,500 |
|
| 1 |
|
540001 |
-- |
545000 |
542,500 |
|
| 2 |
|
660001 |
-- |
665000 |
1,328,700 |
|
| 1 |
|
845001 |
-- |
850000 |
850,000 |
|
| 1 |
|
995001 |
-- |
1000000 |
1,000,000 |
|
| 1 |
|
1040001 |
-- |
1045000 |
1,042,500 |
|
| 1 |
|
1080001 |
-- |
1085000 |
1,084,900 |
|
| ----------- |
----------- |
----------- |
----------- |
----------- |
----------- |
|
| 3635 |
|
|
10,000,000 |
|
| ----------- |
----------- |
----------- |
----------- |
----------- |
----------- |
|
|
|
Categories |
|
Number |
Total |
|
|
|
of |
|
of Share- |
Shares |
Percentage |
|
|
Shareholders |
|
holders |
Held |
|
|
|
|
|
| 1 |
Individual |
|
3624 |
4,375,100 |
43.75 |
|
| 2 |
Investment Companies |
4 |
2,877,400 |
28.77 |
|
| 3 |
Insurance Companies |
1 |
4,500 |
0.05 |
|
| 4 |
Joint Stock Companies |
2 |
250,500 |
2.50 |
|
| 5 |
Financial Institutions |
3 |
1,642,500 |
16.43 |
|
| 6 |
Foreign Bank |
1 |
8501000 |
8.50 |
|
| ----------- |
----------- |
----------- |
----------- |
----------- |
----------- |
|
|
|
3635 |
10,000,000 |
100.00 |
|
| ----------- |
----------- |
----------- |
----------- |
----------- |
----------- |
|
|
|
| COMPANY
INFORMATION |
|
|
| Registered
and Head Office |
|
|
| 301-302
Gul Tower |
|
| I.I.
Chundrigar Road |
|
| Karachi-74000 |
|
| Pakistan. |
|
|
| Telephones |
: 242-4655, 242-4616,
242-4639 |
|
| Telefax |
: (92-21) 242-5366,
244-3547 |
|
| e-mail |
:
micleas@biruni.erum.com.pk |
|
|
| Lahore
Office: 67-A/2, Gulberg III, Lahore. |
|
|
| Telephone |
: (042) 575-0429 |
|
| Telefax |
: (042) 571-1919 |
|
|
| Bankers |
|
| Muslim
Commercial Bank |
|
| ANZ
Grindlays Bank |
|
| Bank
of America |
|
| Standard
Chartered Bank |
|
| ABN-AMRO
Bank |
|
|
| Auditors |
|
| Ford
Rhodes Robson Morrow |
|
| Chartered
Accountants |
|
|
| Legal
Advisors |
|
| K.
Salahuddin |
|
| Advocates |
|
| High
Court & Supreme Court |
|
|
| Stock
Exchange Consultants |
|
| Sirajuddin
Cassim |
|
| Stock
Brokers and Corporate Consultants |
|
|
| NOTICE
OF THE ANNUAL GENERAL MEETING |
|
|
| Notice
is hereby given that the Third Annual General Meeting of Network Leasing |
|
| Corporation
Limited will be held at Beach Luxury Hotel, Moulvi Tamizuddin Khan Road, |
|
| Karachi,
on 11 December 1996, at 10.00 a.m. to transact the following business: |
|
|
| 1.
To confirm the Minutes of the Second Annual General Meeting held on 25 |
|
| November
1995. |
|
|
|
|
| 2.
To receive, consider and adopt the Audited Accounts of the Company for the |
|
| year
ended June 30, 1996, together with the Directors and Auditors Reports |
|
| thereon. |
|
|
|
|
|
| 3.
To approve the payment of 10% cash dividend (Re. 1.00 per share) as |
|
| recommended
by the Board of Directors, for the year ended June 30, 1996. |
|
|
|
|
| 4.
To appoint auditors and fix their remuneration. The present auditors, Ford
Rhodes |
|
| Robson
Morrow, Chartered Accountants, retire and being eligible, offer |
|
| themselves
for re-appointment. |
|
|
|
|
| 5.
To transact any other business with the permission of the Chairman. |
|
|
| By
Order of the Board |
|
| Yusuf A. Sattar |
|
| Company
Secretary |
|
|
| Karachi. |
|
| 17
November 1996. |
|
|
| Notes: |
|
|
| a)
The Share Transfer Books of the Company will remain closed from 5 |
|
| December
1996 to 12 December 1996 (both days inclusive). |
|
|
| b)
A member entitled to attend and vote at the meeting may appoint another |
|
| member as his/her proxy to attend and vote
on his/her behalf. Proxies, in |
|
| order to be effective, must be received at
the Registered Office of the |
|
| Corporation duly stamped, signed and
witnessed, not later than 48 hours |
|
| before the meeting. |
|
|
| c)
Members are requested to notify any changes in their addresses immediately. |
|
|
|
|
|
|
|
|
|
|
|
