| Crescent Leasing Corporation Limited |
|
|
|
|
|
|
|
| ANNUAL
REPORT 1997 |
|
|
| CONTENTS |
|
| Company
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 |
|
|
|
|
|
| COMPANY
INFORMATION |
|
| Board
Of Directors |
|
|
| Mr.
Aftab Ahmed Khan |
|
| Chairman |
|
|
| Mr.
Javed A. Callea |
|
| Chief
Executive |
|
|
| Mr.
Altar M. Saleem |
Mr. Rashid Ahmed |
|
| Mr.
Manzur-uI-Haq |
Mr. Shahid Ghaffar |
|
| Mr.
Nessar Ahmed |
Mr. Shams-ul-lslam |
|
|
| Corporate
Secretary |
|
| Mr.
Rashid Sadiq |
|
| Mr.
Zaheer A. Sheikh |
|
|
| Auditors |
|
| Khalid
Majid Husain Rehman & Co. |
|
| Chartered
Accountants |
|
|
| Legal
Advisors |
|
| Cornelius
Lane & Mufti |
|
| Advocates
& Solicitors |
|
|
| Registered
and Share Transfer Office |
|
| 83-Babar
Block, New Garden Town, Lahore |
|
| Phone:
042 - 588-1974 & 75 Fax; 042 - 588-1976 |
|
|
| Head Office |
|
| B-801
& 802, 8th Floor, Lakson Square, Bldg. # 3, Satwar Shaheed Road, Karachi. |
|
| Phone:
021 - 566-1938, 48 & 58 Fax: 021 - 566-1988 |
|
|
|
| NOTICE
OF ANNUAL GENERAL MEETING |
|
| Notice
is hereby given that the 10th Annual General Meeting of the shareholders |
|
| CRESCENT
LEASING CORPORATION LIMITED will be held on Monday, December 22, 1997, |
|
| at
3.30 p.m. at Registered Office, 83-Babar Block, New Garden Town, Lahore to |
|
| transact
the following business: |
|
|
| ORDINARY
BUSINESS |
|
| 1.
To receive, consider and adopt the audited accounts of the company for the
year |
|
| ended
June 30, 1997 together with Directors' and Auditors' Reports thereon. |
|
|
| 2.
To approve, as recommended by the Directors, the payment of Cash Dividend @
15% |
|
|
|
|
| i.e.
Rs. 1.50 per share for the year ended June 30, 1997. |
|
|
| 3.
To appoint Auditors (for the year ending June 30, 1998) and fix their
remuneration. |
|
| The
present Auditors M/S Khalid Majid Husain Rahman, Chartered Accountants, |
|
| retire
and being eligible, offer themselves for re-appointment. |
|
|
| BOOK CLOSURE |
|
| The
share transfer books of the company will remain closed from December 17, 1997
to |
|
| December
23, 1997 (both days inclusive). Transfer received in order at the Registered |
|
|
| Office
by the close of business hours on December 16, 1997 will be treated in time |
|
| for
the entitlement of cash dividend. |
|
|
BY ORDER OF THE BOARD |
|
|
Zaheer A. Shaikh |
|
| Registered
Office: |
|
Corporate Secretary |
|
| 83-Babar
Block, New Garden Town |
|
| LAHORE. |
|
| Telephone
No. (042)5881974-75, 5839631 |
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| Fax
No. (042) 5881976 |
|
|
|
|
| Dated:
August 18, 1997. |
|
|
| NOTE: |
|
|
| 1.
A member eligible to attend and vote at this Meeting may appoint another '~ |
|
| member
as his/her proxy to attend and vote instead of him/her. |
|
|
| 2.
The instrument appointing a proxy and the power of attorney or other
authority |
|
| under
which it is signed or a notarially certified copy of the power of attorney
must |
|
| be
deposited at the registered office of the company at least 48 hours before
the |
|
| meeting.
A from of proxy is enclosed. |
|
|
| 3.
Shareholders are requested to immediately notify the change in address, if
any. |
|
|
| Your
Directors have pleasure in presenting the Audited Accounts for the period
July 1996 |
|
| to
June 1997. |
|
|
| The
financial results of the Company for the period under review are summarized
as |
|
|
|
| DIRECTORS'
REPORT |
|
|
|
For eighteen months |
|
|
1997 |
ended June '96 |
|
|
Rs. (000) |
Rs. (000) |
|
|
| Revenue |
|
97,363 |
76,907 |
|
| Expenditure |
|
59,923 |
32,586 |
|
|
| Profit
before taxation |
|
37,440 |
44,321 |
|
| Provision
for taxation |
|
1,032 |
653 |
|
|
---------- |
---------- |
|
| Profit
after taxation |
|
36,408 |
43,669 |
|
|
| Unappropriated
profit brought forward |
15,945 |
8,345 |
|
|
---------- |
---------- |
|
| Profit
available for appropriation |
52,353 |
52,014 |
|
|
|
|
| Appropriations |
|
|
|
| Transfer
to reserve under NBFI regulations |
7,282 |
8,734 |
|
| Transfer
to general reserve |
2,647 |
4,835 |
|
| Proposed
Dividend @ 15% |
|
22,500 |
22,500 |
|
|
---------- |
---------- |
|
|
32,429 |
36,069 |
|
|
---------- |
---------- |
|
| Unappropriated
profit carried forward |
19,924 |
15,945 |
|
|
========== |
========== |
|
| OPERATING
RESULTS |
|
| By
the grace of Almighty Allah the company made substantial progress, during the |
|
| period
under review, to show an improved all round performance. The income from |
|
| lease
operations was Rs. 89.38 million, during the period, 1996: Rs. 61.24 million
(for |
|
| 18
months). With increased investment in lease finance, the Net Investment in
Leases |
|
| rose
from Rs. 383 million to Rs. 512 million, during the last twelve months, thus |
|
| improving
the bottom line, and resulting in a figure of Rs. 36.4 million as profit
after tax. |
|
|
| As
a percentage, the net profit has shown an increase of around 25 percent,
1996: |
|
| Rs.
43.67 million (18 months). The company has utilized a long-term loan of Rs. 5
million |
|
| from
Commonwealth Development Corporation. The financial charges, with |
|
| increased
gearing, are 49% of the total income. EPS is Rs. 2.43. |
|
|
| The
Company's progress is attributable to the pursuit of an effective strategy
which |
|
| has
resulted in a well diversified lease portfolio. The company pursuing a policy
of |
|
| judicious
selection of sectors and clients has penetrated the niche market i,e., small |
|
| to
medium sized businesses. There is a balanced i.e exposure, with a maximum |
|
| exposure
of 18% in any one sector. Major concentration by type of asset is in Plant |
|
| &
Machinery which is 65 percent of assets financed by the company. The recovery |
|
| position
of the company is by the grace of Allah over ninety five percent. |
|
|
| REVIEW OF OPERATIONS |
|
|
| The
nation has witnessed significant events during the last eight months. The
political |
|
| and
economic developments have been quite swift. It has been a lacklustre year |
|
| which
witnessed a significant deceleration in growth and a severe strain on all
major |
|
| macro-economic
indicators. |
|
|
|
| The
immediate problems are the huge fiscal deficit, the declining foreign
exchange |
|
| reserves
and low domestic savings. On account of inadequate domestic savings, not |
|
| only
investment has been constrained but the country's dependence on external |
|
| resources
has taken a new dimension, which is bordering on high risk. |
|
|
|
|
| Leasing
sector in Pakistan is facing difficulty for a variety of reasons, in
mobilizing |
|
| long-term
funds. This has and is likely to continue to impede the growth rate of
leasing |
|
| companies.
For the medium sized lessors the issue of matching funds is more difficult.
As |
|
| a
result of such happenings margins have fallen. The search for performing
clients has |
|
| accentuated.
Good performers have also shrunk in numbers. |
|
|
|
| Against
this backdrop lease financing activities, dependent on industrial and
commercial |
|
| growth,
depleted due to a combination of factors of which the significant ones are
the |
|
| deterioration
in the law and order situation and under utilized capacity of the |
|
| manufacturing
sector, The corporate sector performance is quite discouraging. |
|
|
| Majority
of the listed companies have failed to reward the shareholders, and therefore |
|
| left
them in a state of disarray. Market capitalization, which was Rs. 355 billion
in July |
|
| 1996,
went up to Rs. 540 billion in June 1997. This situation explicates the
reasons for |
|
| uneasiness
resulting in lack of confidence in economic stability, and therefore hampers |
|
| the
investment flow from outside. |
|
|
| The
level playing field appears to get uneven. Those leasing companies who are |
|
| affiliated
with large banks continue to borrow from banks on favourable terms, while |
|
| other
independent leasing companies have a hard task to perform. It is imperative
that |
|
| the
critical factor for development of leasing industry i.e: right of lessor to
claim the |
|
| depreciation
allowance is not disturbed. This has been threatened and if so will be a |
|
| severe
set back to the industry. Simultaneously, the present legal system for
repossession |
|
| of
leased assets requires an immediate change, whereby lessors right to
repossess the |
|
| lease
asset should be fully respected and enforced. The issue of tax-free transfer
of |
|
| assets
under sale and lease back arrangement must be resolved, keeping the substance |
|
| of
such transactions in focus. |
|
|
| To
top it all the confidence spurring indicators for stable macro economic
environment: |
|
| low
inflation, currency stability and balance of payments are not encouraging,
thus |
|
|
| hampering
the revival of investment activities and in turn impacting the capital |
|
| formation
activities in the country. The current economic situation demands both an |
|
| improved
diagnosis of the key problem areas as well as articulating a set of policies |
|
| designed
to achieve the short and medium term objectives of growth with stabilization |
|
| in
an environment of highly constrained financial resources. |
|
|
| FUTURE
OUTLOOK |
|
| The
Economic Reform Package of the present government aims at boosting the |
|
| industrial
activities. Nevertheless, the government will have to give proper attention
on |
|
| removing
infrastructure inadequacies. With further liberalization and efforts by the |
|
| government
to improve business environment, there will be increased competition. The |
|
| financial
sector is likely to see renewed activities and in tandem the leasing
companies |
|
| will
have to offer new products and broaden the sources of financial instruments
to |
|
| access fund. |
|
|
| Creslease
has now attained a position whereby it is reckoned among the first ten |
|
| companies
in the leasing sector. With improved financial strength, a respectable |
|
| balance
sheet footing and with a quality asset portfolio, Creslease has promising |
|
| opportunities
for mobilizing funds. We are in constant touch with multilateral agencies |
|
| for
obtaining long-term funds. The response is positive and we are quite hopeful
of a |
|
| positive
outcome. |
|
|
| We
are hopeful that the coming months will see a significant improvement in key |
|
| economic
indicators. With accelerated economic growth and a positive business i |
|
| environment,
Creslease is poised to attain new heights, Our long-term view is to |
|
| balance
the interest of shareholders and clients. We are constantly endeavouring |
|
| to
improve shareholders' value. The Directors recommend a cash dividend of |
|
| Rs.
1.50 per share for the year ended June 30, 1997. |
|
|
| The
Board wish to record their appreciation of the valuable contribution of |
|
| Mr.
Stephen Potter and Mr. A.K.M. Sayeed during their term. The board welcomes |
|
| Mr.
Shams-ul-lslam and Mr. Shahid Ghaffar on the Board. |
|
|
| ACKNOWLEDGMENT |
|
| The
Board acknowledges the support of the regulatory authorities, bankers,
lending |
|
| institutions
and Commonwealth Development Corporation. The board wishes to place |
|
| on
record its appreciation of the hard work and dedication shown by the company |
|
| personnel. |
|
|
| AUDITORS |
|
| The
auditors, Khalid Majid Husain Rahman, Chartered Accountants retire and being |
|
| eligible,
offer themselves for re-appointment. |
|
|
| PATTERN
OF SHAREHOLDING |
|
| The
pattern of shareholding as on June 30, 1997, is annexed to this report. |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
| We
have audited the annexed balance sheet of Crescent Leasing Corporation
Limited |
|
| as
at June 30th, 1997 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 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 0 |
|
| affairs
as at June 30th, 1997 and of the profit and the changes in financial
position ~1 |
|
| 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. |
|
|
| Karachi:
August 19,1997 |
|
KHALID MAJID HUSAIN
RAHMAN |
|
|
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 1997 |
|
1997 |
1996 |
|
|
Note |
Rupees |
Rupees |
|
| SHARE
CAPITAL AND RESERVES |
|
|
| Authorised
Capital |
|
| 30,000,000
ordinary shares of Rs. 10/- each |
|
300,000,000 |
200,000,000 |
|
| (1996:
20,000,000) |
|
========== |
========== |
|
|
| Issued, subscribed and
paid-up capital |
3 |
150,000,000 |
150,000,000 |
|
|
| Capital
reserve |
|
| Premium
on issue of right shares |
|
56,250,000 |
56,250,000 |
|
|
| Revenue
reserves |
|
4 |
48,954,041 |
35,045,985 |
|
|
----------- |
----------- |
|
|
255,204,041 |
241,295,985 |
|
|
| LONG-TERM
FINANCES |
|
5 |
254,447,627 |
152,465,773 |
|
|
|
|
| LIABILITIES
AGAINST ASSETS SUBJECT |
|
|
|
| TO
FINANCE LEASE |
|
6 |
88,850 |
559,640 |
|
|
| LONG-TERM
DEPOSITS |
|
7 |
47,676,392 |
33,175,109 |
|
|
| CURRENT
LIABILITIES |
|
|
| Current
maturity of long-term liabilities |
8 |
61,038,525 |
19,490,883 |
|
| Certificates
of investment |
|
9 |
10,000,000 |
- |
|
| Short-term
finances |
|
10 |
22,929,237 |
3,700,094 |
|
| Creditors,
accrued and other liabilities |
11 |
36,679,210 |
13,418,789 |
|
| Proposed
dividend |
|
|
22,500,000 |
22,500,000' |
|
|
|
---------- |
---------- |
|
|
|
153,146,972 |
59,109,766 |
|
| COMMITMENTS |
|
12 |
|
|
---------- |
---------- |
|
|
710,563,882 |
486,606,273 |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these financial statements. |
|
|
| TANGIBLE
FIXED ASSETS |
|
|
| Operating
assets |
|
13 |
16,109,583 |
16,659,487 |
|
| Assets
subject to Finance leases |
|
14 |
378,017 |
995,435 |
|
|
---------- |
---------- |
|
|
16,487,600 |
17,654,922 |
|
|
| NET
INVESTMENT IN LEASES |
|
16 |
346,069,343 |
272,037,673 |
|
|
|
|
|
|
| LONG
TERM INVESTMENTS |
|
17 |
4,125,000 |
- |
|
|
|
|
|
|
|
|
|
| LONG-TERM DEPOSITS AND |
DEFERRED COST |
|
18 |
23,418,217 |
17,062,436 |
|
|
|
|
|
| LONG-TERM
LOAN |
|
19 |
1,699,990 |
499,994 |
|
|
|
| CURRENT ASSETS |
|
| Current
maturity of net investment in leases |
16.1 |
164,914,537 |
110,738,371 |
|
| Investments |
|
20 |
55,435,000 |
40,935,000 |
|
| Advances, deposits,
prepayments and |
|
| other
receivables |
|
21 |
25,094,955 |
14,876,871 |
|
| Cash
and bank balances |
|
22 |
73,319,240 |
12,801,006 |
|
|
---------- |
---------- |
|
|
318,763,732 |
179,351,248 |
|
|
---------- |
---------- |
|
|
710,563,882 |
486,606,273 |
|
|
========== |
========== |
|
|
|
|
|
|
|
| PROFIT
AND LOSS ACCOUNT FOR THE |
|
|
|
| YEAR
ENDED JUNE 30, 1997 |
|
|
|
|
|
|
|
|
For the eighteen |
|
|
|
months ended |
|
|
|
June |
|
|
|
199? |
1996 |
|
|
Note |
Rupees |
Rupees |
|
|
| Income
from lease operations |
|
89,380,983 |
61,236,959 |
|
| Other income |
|
23 |
7,982,090 |
15,670,487 |
|
|
|
---------- |
---------- |
|
|
97,363,073 |
76,907,446 |
|
|
| Administrative
and operating expenses |
|
24 |
10,973,688 |
13,656,391 |
|
| Financial
charges |
|
25 |
47,984,514 |
17,876,396 |
|
| Provision
for potential lease losses |
|
473,187 |
325,232 |
|
| Amortization
of deferred cost |
|
491,305 |
727,639 |
|
|
|
---------- |
---------- |
|
|
59,922,694 |
32,585,658 |
|
|
---------- |
---------- |
|
| Operating
profit |
|
37,440,379 |
44,321,788 |
|
| Taxation |
|
27 |
1,032,323 |
652,751 |
|
| Profit
after taxation |
|
---------- |
---------- |
|
|
36,408,056 |
43,669,037 |
|
|
| Unappropriated
profit brought forward |
|
15,945,174 |
8,344,899 |
|
|
---------- |
---------- |
|
|
52,353,230 |
52,013,936 |
|
| Appropriations: |
|
| Transfer
to reserve under NBFI regulations |
|
72,816,111 |
8,733,807 |
|
| Transfer
to general reserve |
|
2,646,892 |
4,834,955 |
|
| Proposed
Dividend |
|
22,500,000 |
22,500,000 |
|
|
---------- |
---------- |
|
|
32,428,503 |
36,068,762 |
|
|
|
---------- |
---------- |
|
| Unappropriated
profit carried forward |
|
19,924,727 |
15,945,174 |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these financial statements. |
|
|
|
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| (CASH
FLOW STATEMENT) FOR THE YEAR ENDED JUNE 30, 1997 |
For the |
|
|
|
months ended |
|
|
|
June |
|
|
1997 |
1996 |
|
|
|
Rupees |
Rupees |
|
|
|
|
| Cash flows from operating
activities |
|
|
|
| Operating
profit before taxation |
|
37,440,379 |
44,321,788 |
|
|
| Adjustment
for: |
|
| Deferred
cost amortized |
|
491,305 |
727,639 |
|
| Depreciation |
|
2,077,114 |
2,460,683 |
|
| Provision
for doubtful debts |
|
473,187 |
325,232 |
|
| (gain)/Loss
on disposal of fixed assets |
|
(200) |
159,443 |
|
|
---------- |
---------- |
|
| Operating
profit before working capital changes |
|
40,481,785 |
47,994,785 |
|
|
| Increase
in net investment in leases |
|
(128,681,023) |
(245,337,734) |
|
| Increase
in long-term deposits from customers |
|
12,682,157 |
21,020,261 |
|
| Increase
in creditors accured and other liabilities |
23,190,059 |
11,802,478 |
|
| Increase
in advances, deposits, prepayments and other |
|
|
| receivables |
|
(11,100,213) |
(10,280,794) |
|
|
---------- |
---------- |
|
| Cash
used in operations |
|
(63,427,235) |
(174,801,004) |
|
| Income
tax (paid) / recovered |
|
|
449,806 |
(2,478,406) |
|
|
|
---------- |
---------- |
|
| Net
cash used in operating activities |
|
(62,977,429) |
(177,279,410) |
|
|
| Cash
flows from investing activities |
|
| Purchase
of fixed assets |
|
(1,262,760) |
(19,639,433) |
|
| Long
term investments |
|
(4,125,000) |
-- |
|
| Proceed
from sale of fixed assets |
|
353,168 |
1,932,665 |
|
| Long-term
loans -net |
|
(1,799,996) |
(470,255) |
|
| Addition
in long term deposits and deferred cost |
|
(6,847,086) |
(16,736,538) |
|
|
---------- |
---------- |
|
| Net
cash used in investing activities |
|
(13,681,674) |
(34,913,561) |
|
|
|
|
| Cash
flows from financing activities |
|
|
|
| Proceeds
from issue of share capital |
|
- |
75,000,000 |
|
| Share
Premium |
|
- |
56,250,000 |
|
| Proceeds
from long-term finances |
|
172,782,443 |
164,893,317 |
|
| Repayment
of long-term finances |
|
(27,364,949) |
(10,237,192) |
|
| Proceeds
from certificates of investment |
|
10,000,000 |
- |
|
| (Repayment)/proceeds
of short-term finances |
|
19,229,143 |
(31,299,906) |
|
| Proceeds
from lease obligations |
|
- |
1,303,800 |
|
| Repayment
of lease obligations |
|
(539,662) |
(350,725) |
|
| Payment
of dividend |
|
(22,429,638) |
- |
|
|
---------- |
---------- |
|
| Net
cash flows from financing activities |
|
151,677,337 |
255,559,294 |
|
|
---------- |
---------- |
|
| Net
increase in cash and cash equivalents |
|
75,018,234 |
43,366,323 |
|
| Cash and cash
equivalents at beginning of the year |
53,736,006 |
10,369,683 |
|
|
---------- |
---------- |
|
| Cash
and cash equivalents at the end of the year (Note A) |
128,754,240 |
53,736,006 |
|
|
========== |
========== |
|
| Note
A. Cash and cash equivalents at the end of the year |
|
|
| Cash
and bank balances |
|
73,319,240 |
12,801,006 |
|
| Investments |
|
55,435,000 |
40,935,000 |
|
|
---------- |
---------- |
|
|
128,754,240 |
53,736,006 |
|
|
========== |
========== |
|
| NOTES
TO THE FINANCIAL STATEMENTS |
|
| FOR
THE EAR ENDED JUNE 30, 1997 |
|
|
