| ASKARI LEASING LIMITED |
|
|
|
|
|
|
|
|
| ANNUAL
REPORT 1997 |
|
|
| CONTENTS |
|
| Corporate
Information |
|
| Notice
of Meeting |
|
| Directors'
Report |
|
| Auditors'
Report |
|
| Balance Sheet |
|
|
| Profit
and Loss Account |
|
| Statement
of Changes |
|
| in
Financial Position |
|
| Notes
to the Accounts |
|
| Pattern
of Shareholding |
|
| Financial
Highlights |
|
|
|
|
|
| CORPORATE
INFORMATION |
|
| BOARD
OF DIRECTORS |
|
| Lt.
Gen. (R) Farrakh Khan |
|
Chairman |
|
| Brig.
(R) Khalid Latif |
|
Director |
|
| Brig.
(R) Sajjad Ahmed Nazim |
|
Director |
|
| Brig.
(R) Zafar Ahmed |
|
Director |
|
| Brig.
(R) Khalid Raza |
|
Director |
|
| Dr.
Safdar All Butt |
|
Director |
|
| Mr.
Shujat All Khan |
|
Director |
|
| Mr.
Shahid Ghaffar |
|
Director (NIT Nominee) |
|
|
| CHIEF
EXECUTIVE |
|
| Mr.
Taimur Afzal |
|
|
| COMPANY
SECRETARY |
|
| Mr.
Zafar Alam Khan Sumbal |
|
|
| BANKERS |
|
| Askari
Commercial Bank Ltd. |
|
| American
Express Bank |
|
| ABN-AMRO Bank |
|
| ANZ
Grindlays Bank |
|
| Bank
of America NT & SA |
|
| The
Bank of Punjab |
|
| Credit
Agricole Indosuez |
|
| Citi
Bank N.A. |
|
| Deutsche Bank |
|
| Emirates
Bank International |
|
| Faysal
Bank Ltd |
|
| Habib
American Bank |
|
| The
Hong Kong and Shanghai Banking Corporation Ltd |
|
| Prime
Commercial Bank |
|
| Standard
Chartered Bank |
|
|
| AUDITORS |
|
| Taseer
Hadi Khalid & Co. |
|
| Chartered
Accountants |
|
|
| LEGAL ADVISOR |
|
| Walker
Martineau Saleem |
|
| Mr.
M. Hanif Bhatti |
|
|
| REGISTRAR
AND SHARE |
|
| Askari
Associates (Pvt.) Ltd. |
|
|
| TRANSFER
OFFICE |
|
| 6th
Floor, AWT Plaza, The Mall, P.O. Box 678. Rawalpindi. |
|
| Telephone:
(051) 514370-71, 516108, 562848 |
|
| Fax:
(051) 516109 |
|
|
| REGISTERED |
|
| OFFICE/HEAD
OFFICE |
|
| 5th
Floor, AWT Plaza, |
|
| The
Mall, Rawalpindi. |
|
| Telephone:
(051) 511309-11, 566216, 566153, 515267 |
|
| LIAN
111-111-345 |
|
| Fax:
(051) 565670 |
|
|
|
| NOTICE
OF THE FIFTH ANNUAL GENERAL MEETING |
|
| Notice
is hereby given that the Fifth Annual General Meeting of Askari Leasing
Limited will be held on October 18. 1997 at |
|
| 0900
hours in Blue Lagoon Complex, opposite Pearl Continental Hotel outward gate,
Rawalpindi to transact the following |
|
| business:- |
|
|
| ORDINARY
BUSINESS |
|
| 1.
To confirm the minutes of the Fourth Annual General Meeting held on 26
November 1996. |
|
| 2.
To receive, consider and adopt the Audited Accounts together with Directors'
and Auditors' Reports thereon for the |
|
| year
ended 30 June 1997. |
|
| 3.
To appoint Auditors of the company for the year ending 30 June 1998 and to
fix their remuneration. |
|
|
| SPECIAL
BUSINESS |
|
| 4.
To confirm the minutes of the Extra-Ordinary General Meeting held on 22 April
1997. |
|
| 5.
To consider and approve the issue of Bonus Shares in the proportion of 20
shares for every 100 shares held i.e. |
|
| 20%. |
|
| 6.
Any other business with the permission of the Chair. |
|
|
| NOTES: |
|
|
| 1.
The Share Transfer Books of the Company will be closed from 12 October 1997
to 18 October 1997 (both days |
|
| inclusive). |
|
|
| 2.
A Member entitled to attend and vote at the meeting is entitled to appoint a
Proxy to attend the meeting and vote |
|
| for
him/her, Proxies in order to be effective must be received by the company at
its Registered Office not less than |
|
| 48
hours before the meeting. |
|
|
| 3.
Shareholders are' requested to notify the change of address, if any, to our
Registrar M/s Askari Associates |
|
| (Private)
Limited, 6th Floor, AWT Plaza, The Mall, P.O. Box 678, Rawalpindi,
immediately.. |
|
|
| STATEMENT
IN REGARD TO SPECIAL BUSINESS AS REQUIRED UNDER SECTION 160 OF THE COMPANIES |
|
| ORDINANCE,
1984. |
|
|
| Issuance
of Bonus Shares |
|
| To
approve capitalization of a sum of Rs. 40 million out of profits for the year
for the issuance of bonus shares |
|
| in
the proportion of 20 shares for every 100 shares held i.e. 20% and to
consider and approve the following resolution by way |
|
| of
Special Resolution:- |
|
|
| Resolved
that: |
|
|
| a)
"A sum of Rs. 40 million out of profits for the year be capitalized and
applied to the issue of 4,000,000 |
|
| ordinary
shares of Rs. 10 each and allotted as fully paid-up Bonus Shares to the
members of the |
|
| Company
whose names appear on the Register of Members as at close of business on
October 12, 1997 |
|
| in
the proportion of 20 shares for every 100 Ordinary Shares held. |
|
|
| b)
The Bonus Shares shall rank pari passu in all respects with the existing
shares. |
|
|
| c)
The members entitled to a fraction of a share shall be given sale proceeds of
their fractional entitlement. |
|
| for
which purpose the fractions shall be consolidated into whole shares and sold
in the stock market. |
|
|
| d)
The Directors be and are hereby authorized and empowered to give effect to
this resolution and to do or |
|
| cause
to be done all acts. deeds and things that may be necessary or required for
issuance, allotment |
|
| and
distribution of Bonus Shares. |
|
|
| ADDENDUM |
|
| In
order to facilitate the shareholders, Askari Leasing Limited ordinary shares
will be an eligible security for the purposes of the |
|
| Central
Depository System w.e.f. 08th October 1997. Considering the same and with the
consent of Stock Exchanges, the Board |
|
| of
Directors has decided to change the date of Book closure an(~ the date of its
Fifth Annual General Meeting. The previous and |
|
| new
dates are as under: |
|
|
|
Previous Date |
|
New Date |
|
| Book Closure |
|
12-18 October 1997 |
22-29 November 1997 |
|
|
(both days inclusive) |
(both days inclusive) |
|
| Fifth AGM |
|
18 October 1997 |
29 November 1997 |
|
|
| The
agenda, time, day and venue of the meeting will remain unchanged. |
|
|
|
| DIRECTORS'
REPORT |
|
| The
Board of Directors of your company feels pleasure n presenting the Fifth
Annual Report for the year ended June 30, |
|
| 1997. |
|
|
| FINANCIAL
RESULTS |
|
|
|
(Rs. in '000) |
|
|
| Total Revenue |
|
|
630,976 |
|
|
|
|
| Total
Expenditure |
|
495,901 |
|
| Profit
for the Year |
|
135,075 |
|
| Tax provision |
|
(15,000) |
|
| Profit
after tax |
|
120,075 |
|
| Un-appropriated
profit brought forward |
1,793 |
|
| Profit
available for appropriation |
121,868 |
|
|
| Appropriations |
|
|
| Transfer
to statutory reserve |
|
24,015 |
|
| Proposed
bonus shares |
|
40.00 |
|
| Transfer
to general reserve |
|
56 000 |
|
| Unappropriated
profit carried forward |
1,853 |
|
|
|
|
|
| DIVIDEND |
|
| The
Board of Directors has recommended a bonus @ 20% for the year ended June 30,
1997. |
|
|
| REVIEW
OF OPERATIONS |
|
| This
year has been a crisis year for the financial sector. The economic activity
has been at a standstill and major shifts |
|
| in
the viabilities of industrial sectors has forced the managers of financial
institutions to re-evaluate the credit policies. |
|
| increase
monitoring activities and focus on provisioning policies. Cement sector has
seen its fortune fluctuate wildly |
|
| while
power sector has lost its sparkle in a relatively short period. The liquidity
crunch at WAPDA KESC and certain |
|
| other
government corporations has severely curtailed their investment capabilities.
This in turn has had a major impact |
|
| on
suppliers of goods and services to these corporations. |
|
|
| Despite
this gloomy picture we foresee positive indications ~n government |
|
| policies
to steer the economy into the right direction. Professional |
|
| management
at nationalized banks. improved relations with IMF. focused |
|
| privatization
and renewed foreign investor interest bodes well for the future. |
|
|
|
| In
the above background. your company is moving ahead at a steady pace |
|
| set
over the last 4 years. Lease income of Rs. 511 million and total revenue |
|
| of
Rs. 631 million compare favourably with last year figures of Rs. 313 |
|
| million
and Rs. 379 million respectively. Lease income is 81% of total |
|
| revenue,
in line with previous years, showing our continued commitment to |
|
| our
core business i.e. leasing. Financial charges of Rs. 420 million represent |
|
| major
portion of our total expense and are 78% higher than last year. This is |
|
| reflective
of our growth and the higher cost of our borrowings - primarily |
|
| ANZA
certificates of Investment (COIs). Administrative cost of Rs. 32 million |
|
| is
higher by Rs. 7 million from last year. The major variance is represented |
|
| by
advertising costs (Rs. 4 million higher than last year) incurred on |
|
| publicizing
ANZA COIs. We will continue to direct resources in this area to |
|
| further
broaden our COl base. The administrative expenses represent only |
|
| 0.8%
of our total assets - lowest among the larger leasing companies. |
|
|
| As
discussed earlier. lease loss provisions have come under close scrutiny |
|
| of
the management especially given the adverse economic condition of the |
|
| country.
In light of this we have adopted a policy which recognises the |
|
| current
economic environment and ensures that the balance sheet reflects |
|
| the
true financial health of the company. This policy will also give confidence |
|
| to
our creditors and the rating agencies. Our current year lease loss |
|
| provision
is Rs. 43 million compared to Rs. 17 million in the previous year |
|
| and
total provision as of June 30. 1997 is Rs. 75 million i.e. 2.6% of net |
|
| investment
in leases. |
|
|
| Total
assets of the company increased from Rs. 2.7 billion in 1996 to Rs. 4 |
|
| billion
in 1997. Net investment in lease increased from Rs. 1.9 billion to Rs. |
|
| 2.9
billion a 53% increase. This strong growth in the leasing business is |
|
| reflective
of marketing efforts and acceptability of your company as a major |
|
| player
in the leasing business in Pakistan. Diversification of our lease |
|
| portfolio
remains central to our risk management strategy. Sectorwise lease |
|
| analysis
shows 23% in Power. 20% in Fuel and Energy 14% in |
|
| Cement,
11% in Services, 5% in Textile, 4% in Tobacco and 4% in |
|
| Chemical.
The balance 19% is distributed in banking, glass. |
|
| ceramics.
engineering, etc. Geographically the lease portfolio is |
|
| divided
between Karachi (32%), Lahore/ Faisalabad (55%) and |
|
| Rawalpindi/
Islamabad (13.%). Our majority of leases are for |
|
| machinery
(71%) while the balance is in equipment (22%) and |
|
| vehicles
(7%). |
|
|
| The
assets have primarily been financial through ANZA COIs. |
|
| As
explained in our previous reports to the shareholders. we |
|
| continue
our primary reliance on this source of funds. We carried out |
|
| a
major advertising campaign in the last quarter of the year and are |
|
| encouraged
by the response from the public. We intend to commit |
|
| additional
resources to further increase our share of savings market. |
|
| This
is possible due to ready acceptability and the trust reposed in our |
|
| corporate
brand name- "ASKARI". We are committed to increase |
|
| our
customer base by continuing to provide the best returns and |
|
| professional
service. We are quite confident of our success. |
|
|
| We
are seeking to diversify our resource base by approaching |
|
| multilateral
agencies and other international institutions. Financial |
|
| institutions
in Pakistan have shown their full confidence in your |
|
| company
and we continue to look for their support and advice. We |
|
| have
built these relationships on solid ground for mutual benefits. |
|
|
| Information
technology is changing at a rapid pace and the |
|
| management
is committed to use this technology to create |
|
| efficiencies
and value for your company. We will continue to invest in |
|
| software
and hardware to achieve highest levels of efficiencies in |
|
| delivering
financial services and to achieve competitive advantage. |
|
|
| Our
planned growth requires a regular supply of human capital. Our |
|
| strategy
to open additional branches will also require quality staff to |
|
| give
us effective penetration in the market. We will invest in the |
|
| human
resources to sustain these growth levels. The Board is |
|
| appreciative
of dedication and hard work of employees in achieving |
|
| the results. |
|
|
| PACRA RATING |
|
| Pakistan
Credit Rating Agency (PACRA) has rated the company A and A1 for long term and
short term obligations. This |
|
| is
among the best ratings in the leasing sector in Pakistan. |
|
|
| AUDITORS |
|
| The
Auditors, M/s Taseer Hadi Khalid and Company, retire and being eligible offer
themselves for reappointment. |
|
|
| PATTERN
OF SHARE HOLDING |
|
| The
pattern of share holding of the Company as at June 30, 1997 is shown. |
|
|
| ACKNOWLEDGMENT |
|
| We
wish to thank Corporate Law Authority, State Bank of Pakistan and other
regulatory authorities for their cooperation. |
|
| guidance
and support whenever sought. |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
| We
have audited the annexed balance sheet of Askari Leasing Limited as at 30
June 1997 and the related profit and loss |
|
| account
and the 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 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 accounting policies consistently applied; |
|
|
| 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, 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 |
|
| 30
June 1997 and of the profit and the changes in the financial position for the
year 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. |
|
|
|
Taseer Hadi Khalid &
Co. |
|
| Islamabad:
July 29, 1997 |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET |
|
| AS
AT JUNE 30, 1997 |
|
|
Note |
1997 |
1996 |
|
|
(Rs in '000) |
(Rs in '000) |
|
| ASSETS |
|
|
|
| Fixed
Assets - Tangible |
|
3 |
14,816 |
6,514 |
|
| Long
Term Advances |
|
4 |
6,086 |
377 |
|
| Deferred
Costs |
|
|
300 |
500 |
|
| Long
Term Investments |
|
5 |
5,000 |
5,000 |
|
|
|
---------- |
---------- |
|
| Net
Investment in Lease Finance |
|
|
|
| Minimum
Lease Payments Receivable |
|
|
3,207,006 |
2,264,494 |
|
| Add:
Residual Value |
|
|
469,748 |
212,733 |
|
|
|
---------- |
---------- |
|
|
|
3,676,754 |
2,477,227 |
|
| Less:
Unearned Finance Income |
|
|
771 284 |
561,751 |
|
|
|
---------- |
---------- |
|
| Net
Investment in Leases |
|
6 |
2,905,470 |
1,915,476 |
|
| Less:
Current Portion |
|
|
710,303 |
491,338 |
|
|
|
---------- |
---------- |
|
|
|
|
2,195,167 |
1,424,138 |
|
|
|
|
| Current
Assets |
|
7 |
1,797,060 |
1,302,413 |
|
|
|
---------- |
---------- |
|
|
|
4,018,429 |
2,738,942 |
|
|
|
========== |
========== |
|
| CAPITAL
AND LIABILITIES |
|
|
|
| Share
Capital and Reserves |
|
|
|
| Authorized
Capital |
|
|
|
| 50,000,000
ordinary shares of Rs. 10/- each |
|
500,000 |
500,000 |
|
|
|
========== |
========== |
|
| Issued,
Subscribed and Paid up Capital |
|
|
|
| 20,000,000
ordinary shares of Rs. 10/- each |
|
200,000 |
200,000 |
|
| issued
for cash |
|
|
|
|
|
|
| Reserves |
|
|
|
|
| Reserves |
|
8 |
267,963 |
147.95 |
|
| Unappropriated
profit |
|
|
1,853 |
1,793 |
|
|
|
---------- |
---------- |
|
|
|
269.82 |
149.74 |
|
|
|
---------- |
---------- |
|
|
|
469,816 |
349.74 |
|
|
|
|
| Allowance
for Potential Lease Losses |
|
2.3 |
74,670 |
31,287 |
|
| Long
Term Liabilities |
|
9 |
2,118,780 |
1,238,570 |
|
| Current
Liabilities |
|
10 |
1,355,163 |
1,119,343 |
|
|
|
---------- |
---------- |
|
|
|
4,018,429 |
2,738,942 |
|
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
| The auditor's report is
annexe thereto. |
|
|
|
|
|
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
|
|
| FOR
THE YEAR ENDED JUNE 30, 1997 |
|
|
|
Note |
1997 |
1996 |
|
|
|
(Rs. in '000) |
(Rs. in '000) |
|
| REVENUE |
|
|
|
| Lease income |
|
11 |
511 128 |
312,582 |
|
| Income
from short term investments |
|
|
58,296 |
30,761 |
|
| Income
from bank deposits |
|
|
44,684 |
22,174 |
|
| Fees
and commission |
|
|
13,400 |
13,422 |
|
| Other income |
|
|
3,468 |
350 |
|
|
|
---------- |
---------- |
|
|
|
630,976 |
379,289 |
|
|
|
|
| EXPENDITURE |
|
|
|
|
| Finance
and bank charges |
|
12 |
420,440 |
236,489 |
|
| General
and administrative expenses |
|
13 |
32,079 |
25,342 |
|
| Allowance
for potential lease losses |
|
|
43,382 |
17.22 |
|
|
|
---------- |
---------- |
|
|
|
495,901 |
279,051 |
|
|
|
---------- |
---------- |
|
| Profit
Before Taxation |
|
|
135,075 |
100,238 |
|
| Provision
for Taxation |
|
|
|
|
| Current |
|
|
13,000 |
4,500 |
|
| Prior years' |
|
|
2,000 |
- |
|
|
|
---------- |
---------- |
|
|
|
15,000 |
4,500 |
|
|
|
---------- |
---------- |
|
| Profit
After Tax |
|
|
120,075 |
85,788 |
|
| Un-appropriated
Profit Brought Forward |
|
|
1,793 |
1.20 |
|
|
|
---------- |
---------- |
|
| Profit
Available for Appropriations |
|
|
121,868 |
96,941 |
|
|
|
|
| APPROPRIATIONS |
|
|
|
|
|
| Transferred
to reserve fund |
|
|
|
24,015 |
19,148 |
|
| Transferred
to general reserve |
|
|
56.00 |
36.00 |
|
| Transferred
to reserve for issue of bonus shares |
|
40.00 |
- |
|
| Proposed
dividend |
|
|
|
- |
40,000 |
|
|
|
|
---------- |
---------- |
|
|
|
|
120,015 |
95,148 |
|
|
|
|
---------- |
---------- |
|
| Un-appropriated
Profit Carried Forward |
|
1,853 |
1 793 |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
1997 |
1996 |
|
| STATEMENT OF CHANGES IN
FINANCIAL POSITION |
|
(Rs. in '000) |
(Rs, in '000) |
|
| FOR
THE YEAR ENDED JUNE 30, 1997 |
|
|
|
|
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
| Net
profit after tax |
|
120,075 |
95,738 |
|
| Adjustment
for: |
|
|
|
| Depreciation |
|
2,904 |
2,332 |
|
| Allowance
for potential lease losses |
|
43,382 |
.17,220 |
|
| Profit
on disposal of fixed assets |
|
(21) |
- |
|
| Amortization
of deferred costs |
|
200 |
200 |
|
| Provision
for diminution in value of shares |
|
176 |
2,356 |
|
|
---------- |
---------- |
|
|
46,641 |
22,108 |
|
|
---------- |
---------- |
|
| Operating
Profit Before Working Capital Changes |
|
166,716 |
117 646 |
|
| (Increase)/decrease
in: |
|
|
|
| Short
term investments |
|
(386,474) |
(280,950) |
|
| Advances,
prepayments and other receivables |
|
126,752 |
151,939) |
|
|
---------- |
---------- |
|
|
(259,722) |
(432,889) |
|
| Increase
in current liabilities |
|
77,445 |
84,653 |
|
|
---------- |
---------- |
|
| Net
Cash Used in Operating Activities |
|
(15,561) |
(230,390) |
|
|
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
|
| Purchase
of operating fixed assets |
|
(11,537) |
(3,553) |
|
| Disposal
of operating fixed assets |
|
351 |
- |
|
| Long
term advances/investments |
|
(5,709) |
(5,377) |
|
| Investment
in lease finance (net) |
|
(989,994) |
(1,019,453) |
|
|
---------- |
---------- |
|
| Net
Cash Used in Investing Activities |
|
(1,006,889) |
(1,028,383) |
|
|
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
|
| Bridge
finance |
|
- |
(56,000) |
|
| Deposits
on lease contracts |
|
108,485 |
88,297 |
|
| Loans
from financial institutions |
|
313,622 |
(187,788) |
|
| Certificates
of investment |
|
653,212 |
1,286,089 |
|
| Dividend paid |
|
(36,734) |
- |
|
| Proceeds
from issue of right shares |
|
- |
100,000 |
|
|
---------- |
---------- |
|
| Net
Cash From Financing Activities |
|
1,038,585 |
1,230,598 |
|
|
---------- |
---------- |
|
| Net
increase/(decrease)in cash and cash equivalents |
|
16,136 |
(28,175) |
|
| Cash
and cash equivalents at the beginning of the year |
|
42,579 |
70,753 |
|
|
---------- |
---------- |
|
| Cash
and cash equivalents at the end of the year |
|
58,714 |
42,578 |
|
|
========== |
========== |
|
|
|
|
|
|
|
| NOTES TO THE ACCOUNTS |
|
| FOR
THE YEAR ENDED JUNE3O, 1997 |
|
|
|
| 1. COMPANY AND ITS OPERATIONS |
|
| Askari
Leasing Limited ("the company") was incorporated in Pakistan as a
public limited company on Ist August |
|
| 1993
and is listed on the Karachi, Lahore and Islamabad Stock Exchanges. The
company principally carries on the |
|
| business
of leasing and providing finance. |
|
