| ENGLISH LEASING LIMITED |
|
|
|
|
|
|
|
|
|
| ANNUAL
REPORT 1997 |
|
|
| CONTENTS |
|
| Company Information |
|
| Board
of Directors |
|
| Chairman's
Review |
|
| Directors'
Report |
|
|
| Auditors'
Report |
|
|
| Balance
Sheet |
|
| Profit
& Loss Account |
|
|
| Statement
of Changes in Financial Position |
|
| Notes
to the Accounts |
|
| Notice
of Annual General Meeting |
|
| Pattern
of Shareholding |
|
|
| Company
Secretary |
|
| Mr.
Azhar Hussain |
|
|
| Bankers |
|
| Allied
Bank of Pakistan Limited |
|
| Muslim
Commercial Bank Limited |
|
| The
Bank of Khyber |
|
| Prudential
Commercial Bank Ltd. |
|
|
| Auditors |
|
| Rahim
Iqbal Rafiq & Co. |
|
| Chartered
Accountants |
|
|
| Legal Advisor |
|
| Mr.
Haq Nawaz Chattha |
|
| International
Legal Services |
|
|
| Registrars
& Share Transfer Office |
|
| C
& K Management Associates (Pvt.)Limited |
|
| 4th
Floor, Trade Tower, |
|
| Abdullah
Haroon Road, |
|
| Near
Metropole Hotel, Karachi - 75530 |
|
|
| Registered
Office |
|
| 801,
8th Floor Fortune Centre |
|
| 45-A,
Block '6', P.E.C.H.S., |
|
| Shahrah-e-Faisal, |
|
| Karachi |
|
| Tel:
4529061 - 64 (4 Lines) |
|
| Fax: 4529065 |
|
|
| Principal
Office |
|
| M. K. Arcade |
|
| 32
- Davis Road, |
|
| Lahore. |
|
| Tel:
6303855 - 58, 6302803 - 4 |
|
|
| Fax:
9242 - 6304251 |
|
|
| BOARD
OF DIRECTORS |
|
| Sheikh
Javaid Mahmood |
Chairman |
|
| Sheikh
Manzoor Elahi |
Chief Executive |
|
| Sheikh
Irshad Ahmed |
Director Marketing |
|
| Mr.
Muhammad Saad Maniar |
Director |
|
| Mr.
Muhammad Rashid Zahir |
Nominee of SAPICO |
|
| Mr.
Shahid Ghaffar |
Nominee of NIT |
|
| Mrs.
Taskeen Javaid |
Director |
|
|
|
|
|
| CHAIRMANS'
REVIEWS |
|
| The
period from July, 1996 to June, 1997 has been |
|
| an
era of turmoil, hopes and despairs. Contrary |
|
| to
expectations, all sectors of business, trade and |
|
| industry
having sparked for a while, on the induction |
|
| of
New Government of Pakistan Muslim League sunk |
|
| into
the gloom, which started with wheat crises |
|
| followed
by sectarian killings and unending chain |
|
| of
unfortunate events culminating into macro |
|
| economic
imbalances, galloping inflation, eroding |
|
| purchasing
power and mass unemployment. Incentive |
|
| package
offered by the Government for the revival |
|
| and
promotion of trade and industry failed to change |
|
| the
business or industrial climate. The Government |
|
| could
not achieve its targets. The GDP growth rate of 3.1% was hardly higher than |
|
| the
population growth rate and less than half of the targetted 6.3% hence their
was |
|
| virtually
no increase in the per capita income. In some cases there was negative growth |
|
| as
well. Large scale manufacturing registered a decline of 1.4% while the value
added |
|
| sector
grew at less than 1% Major agricultural crops had shown a drop in output of |
|
| about
4.5% Both investment and national savings declined as a percentage Of the |
|
| G.D.P.
Exports fell by 2.7% and despite 5% contraction in imports, the current
Account |
|
| deficit,
excluding official transfers was 6.5% of the G.D.P The tax GDP ratio declined |
|
| while
total debt as a percentage of GDP went up quite contrary to what had been |
|
| envisaged.
Bank borrowings for budgetary support stood at more than three times |
|
| of
the original target. The high level of credit expansion pushed up the
inflationary |
|
| gap
which was recorded at 13% as measured by the consumer price index. Despite |
|
| adverse
circumstances your company had been able to maintain the pace of its progress |
|
| Over
the period from 1st July 96 to 30th June 1997. Gross lease disbursements of
Rs. |
|
| 61.985
million were made raising the total disbursements to Rs, 469.330 million |
|
| registering
an increase of 15.22% over the Previous year figure of Rs. 407. 345 million. |
|
|
| On
revenue side Company generated income from lease operations Rs. 43.186
million, |
|
| gain
on sale of securities Rs. 0.845 million and other income Rs, 1.215 million,
total |
|
| Rs.
45.246 million as against Rs. 36.928 million of the previous year, thus
reflecting |
|
| improvement
of 23%. Inspite of high inflation the expenditure remained under control |
|
| restricting
it to Rs. 30.245 million as against Rs. 22.246 Million of last year, inspite |
|
| of
54% increase in the financial & bank charges which increased from Rs.
11.811 |
|
| million
of 1996 to Rs. 18.166 million in 1997 and earned pretax profit of Rs. 15.001 |
|
| million.
Stock market remained bullish and whatever improvement has been witnessed |
|
| it
was selective and confined to a few chips |
|
| only.
Our short term investment improved from |
|
| Rs. 0.884 million
to Rs. 1.118 million while the |
|
| long term investment
depleted from Rs. 4.337 |
|
| million
to Rs. 3.658 million, but we are still |
|
| of
the view that our investments possess |
|
| adequate
potential of improvement and happier |
|
| position
shall emerge as soon as our economy |
|
| revives
and stability in the county is restored. |
|
| Special care has been
taken to maintaining a |
|
| well
balanced diversified lease portfolio picking |
|
| up
only reputed, well established and financially sound clients. Lease portfolio
comprise |
|
| major
of Machinery 82.38%, Vehicles Private & Commercial 16.02%, and equipment |
|
| 1.60%
Sector-wise position reflect our |
|
| investment
in Textile processing 13.68%, |
|
| Textile
Weaving 5.46%, Textile Spinning |
|
| 2.67%,
Pharmaceutical and Pesticides |
|
| 11.46%,
Engineering 1.88%, Sugar 22.18%, |
|
| Electronics
4.15% Plastic 3.01%, Food and |
|
| Allied
5.03%, Paper & Board 1.86%, |
|
| Synthetic
and Fibres 7.43%, Knitting |
|
| Garments
7.40%. Miscellaneous 13.79%. |
|
|
| Recoveries: |
|
| Adverse
market conditions have caused cash flow problems to almost every business |
|
| and
industry. The menace of stuck up advances with Banks and DFls assumed so |
|
| high
proportions that the State Bank of Pakistan had to bring special loan
incentive |
|
| scheme
to ensure recoveries from the defaulters. Inspite of difficulties our
recovery |
|
| rate
was 81.84% as on 30-06-1997, Since improved to 89.19%. |
|
|
| Resource
Mobilization and Future out look: |
|
| On
account of acute liquidity crunch, availability of credit from local Banks
and |
|
| Financial
institutions remained a serious constraint. However, fresh one Long Term |
|
| Credit
Line of Rs. 30.000 million for three years and one short term finance of Rs. |
|
| 5.000
million could be successfully negotiated during the period. Funds procurement |
|
| drive
has been continuing and one long term line of Rs. 5.000 million for 3 years
and |
|
| two
short term facilities for Rs. 15.000 million have been further procured. |
|
| First Allied Bank Modaraba has agreed to provide Rs. 30.000 million
for 3 years. |
.~ |
|
| Allied
Bank of Pakistan Limited too have been approached for a credit line of equal |
|
| amount
for three years and are hopeful of positive response from them. Our proposals |
|
| for
long term facilities are also under consideration of other banks and
financial |
|
| institutions.
~p,~ |
|
|
| A.D.B
Financial Sector Intermediation Loan (FSIL) |
|
| One
proposal for Rs. 35.000 million stand approved for US$ 873.255 by Asian |
|
| Development
Bank, Manila. Application for disbursement of funds has also been |
|
| accepted
by Asian Development Bank and funds are expected shortly. These funds |
|
| will
be for 12 year with 3 year grace period. Successful materialization of this
transaction |
|
| shall
pave the way for securing further funds from them under this loan. |
|
|
| Certificates
of Investment (COls): |
|
| Public
response has been slow although the profit offered by the company on various |
|
| products
is the highest. In fact public confidence after the failure of Finance
Companies, |
|
| Investment
Companies, Cooperatives and renowned Taj Company has not been |
|
| rehabilitated.
Common man is scare of placing funds with institutions other than well |
|
| known
Commercial Banks and Government/Semi. Government Bodies like National |
|
| Saving
Centres who offer quite attractive return as well but inspite of difficulties
Long |
|
| Term
Deposits aggregating Rs. 19.226 million and Short Term upto 11.500 million |
|
| total
Rs. 30.726 million have been mobilized. We are quite hopeful that with
persistent |
|
| efforts
better results will be achieved. |
|
|
| Acknowledgment: |
|
| I
thank the Ministry of Finance, State Bank of Pakistan, Corporate Law
Authority, |
|
| Financial
Institutions and our valuable customers, as well as Shareholders for the |
|
| guidance
and continued support extended to us by them. I also convey my appreciations |
|
| to
the staff members for the dedication and hard work put in by them for the
promotion |
|
| and
progress of the Company |
|
|
|
| DIRECTORS'
REPORT |
|
| Your
Directors endorse the accompanying Chairman's Review on the activities of the |
|
| Company
and feel pleasure in presenting the Sixth Annual Report together with the |
|
| Audited
Accounts of the Company for the period ended June, 30, 1997. |
|
|
| Financial
highlights of the Company are as follows: |
|
|
| Financial
Highlights |
|
Rupees |
|
| Profit
after tax |
|
11,345,421 |
|
| Unappropriated
profit brought forward |
|
290,292 |
|
| Profit
available for appropriation |
|
11,635,713 |
|
| Appropriation |
|
|
|
|
|
|
| Transfer
to Statutory Reserve |
|
2,269,084 |
|
| Transfer
to General Reserve |
|
9,000,000 |
|
| Transfer
to Contingencies Reserve |
|
- |
|
| Dividend |
|
- |
|
|
---------- |
|
|
11,269,084 |
|
|
---------- |
|
| Unappropriated
profit Carried forward |
|
366,629 |
|
|
========== |
|
|
| Auditors |
|
|
| The
present auditors, Messrs Rahim Iqbal, Rafiq & Company, Chartered
Accountants, |
|
| retire
and being eligible offer themselves for reappointment. |
|
|
| Pattern
of Shareholding |
|
| The
pattern of shareholding is annexed |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
| We
have audited the annexed Balance Sheet of English Leasing Limited as at June |
|
| 30,
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 the |
|
| 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 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,
1997; and of the profit and the changes in 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. |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 1997 |
|
|
|
1997 |
1996 |
|
|
Note |
Rupees |
Rupees |
|
|
|
|
| Share
Capital And Reserves |
|
|
|
|
|
|
| Authorised |
|
|
|
| 50,000,000
Ordinary shares of Rs. 10 each |
|
500,000,000 |
500,000,000 |
|
|
|
========== |
========== |
|
| Issued,
subscribed and paid-up |
|
|
| 8,000,000
Ordinary shares of |
|
|
|
| Rs.
10 each fully paid in cash |
|
80,000,000 |
80,000,000 |
|
|
|
|
| Capital
Reserves |
|
3 |
13,870,517 |
11,601,433 |
|
| Revenue
reserves |
|
4 |
26,883,737 |
17,883,737 |
|
| Unappropriated
profit |
|
|
366,629 |
290,292 |
|
|
|
---------- |
---------- |
|
|
|
121,120,888 |
109,775,462 |
|
|
|
|
| LONG
TERM LOANS |
|
5 |
19,036,259 |
109,775,462 |
|
|
|
|
| OBLIGATIONS
UNDER FINANCE LEASE |
|
889,495 |
- |
|
| LONG
TERM DEPOSITS |
|
|
23,893,508 |
27,086,309 |
|
|
|
|
| LONG
TERM CERTIFICATES OF INVESTMENT |
8 |
19,226,702 |
12,666,305 |
|
| DEFERRED
LIABILITIES |
|
|
|
| Gratuity |
|
|
109,800 |
- |
|
| CURRENT
LIABILITIES |
|
|
|
| Current
portion of obligations |
|
---------- |
---------- |
|
| under
assets subject to lease finance |
|
246,707 |
- |
|
| Current
maturity of long term liabilities |
|
40,780,582 |
32,806,741 |
|
| Short
term finances |
|
9 |
4,217,693 |
15,554,839 |
|
| Short
term certificates of investment |
8 |
11,500,000 |
30,300,000 |
|
| Creditors,
accrued and other liabilities |
10 |
7,840,465 |
4,573,681 |
|
| Taxation |
|
|
642,307 |
480,407 |
|
| Unclaimed
dividend |
|
|
263,339 |
137,129 |
|
| Proposed
dividend |
|
|
|
14,000,000 |
|
|
|
---------- |
---------- |
|
|
|
65,491,093 |
97,852,797 |
|
|
|
|
| CONTINGENCIES
AND COMMITMENTS |
11 |
- |
- |
|
|
|
---------- |
---------- |
|
|
|
249,767,740 |
267,309,862 |
|
|
|
========== |
========== |
|
|
|
|
| The
annexed notes from an integral part of these accounts. |
|
|
|
|
| TANGIBLE
FIXED ASSETS |
|
12 |
7,488,941 |
4,567,012 |
|
| ADVANCE
FOR CAPITAL EXPENDITURE |
|
- |
1,857,000 |
|
| NET
INVESTMENT IN LEASES |
|
13 |
109,393,223 |
148,433,054 |
|
| LONG
TERM INVESTMENTS |
|
14 |
18,310,875 |
17,310,875 |
|
| LONG
TERM DEPOSITS AND DEFERRED COST |
15 |
248,910 |
504,603 |
|
|
|
|
|
| CURRENT ASSETS |
|
|
---------- |
---------- |
|
| Current
portion of net investment in leases |
|
82,013,071 |
70,753,779 |
|
|
|
|
| Investment
in quoted shares against |
|
|
|
|
|
| sale
purchase contract |
|
|
5,239,931 |
2,805,149 |
|
| Short
term investments |
|
16 |
884,250 |
884,250 |
|
| Loans,
advances, prepayments and |
|
|
| other
receivables |
|
17 |
24,539,266 |
14,328,655 |
|
|
|
|
| Cash
at bank Balances |
|
18 |
1,649,273 |
5,865,485 |
|
|
|
---------- |
---------- |
|
|
114,325,791 |
94,637,318 |
|
|
---------- |
---------- |
|
|
249,767,740 |
267,309,862 |
|
|
========== |
========== |
|
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| For
the year ended June 30, 1997 |
|
1997 |
1996 |
|
|
Note |
Rupees |
Rupees |
|
|
| Revenue |
|
| Income
from lease operations |
|
19 |
43,186,416 |
35,335,009 |
|
| Gain
on sale of securities |
|
|
844,782 |
514,181 |
|
| Other income |
|
20 |
1,215,679 |
1,079,486 |
|
|
|
---------- |
---------- |
|
|
|
45,246,877 |
36,928,676 |
|
|
|
|
| Expenditure |
|
|
|
|
| Financial
and bank charges |
|
21 |
18,166,751 |
11,811,398 |
|
| Administrative
and operating expenses |
22 |
9,436,594 |
8,713,102 |
|
| Provision
for doubtful debts |
|
|
2,641,745 |
1,239,998 |
|
| Provision
for diminution in investment |
|
- |
482,000 |
|
|
|
---------- |
---------- |
|
|
|
30,245,090 |
22,246,498 |
|
|
|
---------- |
---------- |
|
| Profit
Before Taxation |
|
|
15,001,787 |
14,682,178 |
|
| Taxation |
|
|
---------- |
---------- |
|
| Current year |
|
23.1 |
581,993 |
515,225 |
|
| Prior year |
|
|
3,074,373 |
1,564,499 |
|
|
|
---------- |
---------- |
|
|
|
3,656,366 |
2,079,724 |
|
|
|
---------- |
---------- |
|
| PROFIT
AVAILABLE FOR APPROPRIATION |
|
11,635,713 |
16,763,415 |
|
|
|
|
| APPROPRIATIONS |
|
|
|
---------- |
---------- |
|
| Transfer
to statutory reserve |
|
2,269,084 |
2,520,491 |
|
| Transfer
to general reserve |
|
|
9,000,000 |
(1,000,000) |
|
| Transfer
to contingencies reserve |
|
- |
952,632 |
|
| Proposed
dividend |
|
|
- |
14,000,000 |
|
|
|
---------- |
---------- |
|
|
|
11,269,084 |
16,473,123 |
|
|
|
---------- |
---------- |
|
| UNAPPROPRIATED
PROFIT CARRIED FORWARD |
|
366,629 |
290,292 |
|
| The
annexed notes form an integral part of these accounts. |
========== |
========== |
|
|
|
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| For
the Year Ended June 30, 1997 |
|
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
1997 |
1996 |
|
|
Rupees |
Rupees |
|
|
| Profit
for the year/period |
|
15,001,787 |
14,682,178 |
|
| Add:
Adjustment to reconcile profit to |
|
|
|
| net
cash provided by operating activities |
|
---------- |
---------- |
|
| Depreciation
and amortization |
|
1,469,562 |
1,631,809 |
|
| Provision
for doubtful debts |
|
2,641,745 |
1,239,998 |
|
| Provision
for diminution of investment |
|
- |
482,000 |
|
| Provision
for Gratuity |
|
109,800 |
- |
|
|
---------- |
---------- |
|
| Operating
profit before working |
|
|
|
| capital
changes |
|
19,222,894 |
18,035,985 |
|
|
---------- |
---------- |
|
| Decrease/(Increase)
in current assets |
|
(12,645,393) |
(5,589,633) |
|
| (Decrease)/Increase
in current liabilities |
|
26,870,362 |
30,607,487 |
|
|
---------- |
---------- |
|
| Net
cash from operating activities |
|
| before
income tax |
|
(20,292,861) |
43,053,839 |
|
| Income
tax paid |
|
(3,494,466) |
(2,368,291) |
|
|
---------- |
---------- |
|
| Net
cash inflow/(outflow) from operating activities |
(23,787,327) |
40,685,548 |
|
|
| Cash
flows from investing activities |
|
---------- |
---------- |
|
| Investment
in leases - net |
|
25,138,794 |
{48,871,579) |
|
| Long
term investment |
|
(1,000,000) |
- |
|
| Capital
expenditure |
|
(4,017,243) |
(59,835) |
|
| Advance
for Capital Expenditure |
|
1,857,000 |
(200,000) |
|
|
|
---------- |
---------- |
|
| Net
cash used in investing activities |
|
21,978,551 |
(49,131,414) |
|
| Cash
flows from financing activities |
|
---------- |
---------- |
|
| Long
term loans |
|
30,000,000 |
12,500,000 |
|
| Proceeds
from lease obligations |
|
1,136,202 |
- |
|
| Certificates
of Investment |
|
6,560,397 |
12,566,305 |
|
| Deposits
from lessees |
|
(1,812,209) |
8,586,087 |
|
| Repayment
of long term loans |
|
(24,299,481) |
(19,827,478) |
|
| Long
term deposits and deferred cost |
|
(118,555) |
(8,000) |
|
| Payment
of dividend |
|
(13,873,790) |
(2,648) |
|
|
---------- |
---------- |
|
| Net
cash (used) /generated |
|
| from
financing activities |
|
(2,407,436) |
13,814,266 |
|
|
|
|
| Net
increase/(decrease) in cash |
|
(4,216,212) |
5,368,400 |
|
| Cash
and bank balances |
|
|
|
| at
beginning of the year |
|
5,865,485 |
497,085 |
|
|
---------- |
---------- |
|
| Cash
and bank balances at the end of the year |
1,649,273 |
5,865,485 |
|
|
========== |
========== |
|
|
|
|
|
|
|
| NOTES
TO THE ACCOUNTS |
|
| For
the Year Ended June 30, 1997 |
|
|
| 1.
The Company and its activities |
|
| English
Leasing Limited is a Public Limited Company incorporated in Pakistan |
|
| and
its shares are quoted on the Stock Exchanges of Pakistan. The Company is |
|
| mainly
engaged in the business of Leasing. |
|
|
| 2.
Summary of significant accounting policies |
|
|
| 2.1
Accounting convention |
|
| These
accounts have been prepared under the historical cost convention. |
|
|
| 2.2
Employee's provident fund and gratuity |
|
| The
Company is in the process of establishing a provident fund scheme |
|
| covering
all its permanent employees and working directors. Equal monthly |
|
| contributions
are made both by the company and employees @ 10% of the |
|
| basic
salaries to the fund. |
|
|
| The
Company operates an unfunded gratuity covering all its employees. |
|
| Provision
is made annually to cover the liability under the scheme. |
|
|
| 2.3
Tangible operating fixed assets and depreciation |
|
| Tangible
operating fixed assets are stated at cost less accumulated |
|
| depreciation.
Cost of these assets consist of historical cost and directly |
|
| attributable
cost of bringing the assets to working conditions. |
|
| Depreciation
is charged to income applying the reducing balance method |
|
| to
write off the cost over their expected remaining useful life. Full year's |
|
| depreciation
is charged on additions, while no depreciation is charged on |
|
| deletion
during the year. |
|
|
| Repairs
and maintenance costs are expensed out as and when incurred, |
|
| however,
major betterment's are capitalized. |
|
|
| Gains
and losses on disposal of assets, if any, are included in income |
|
| currently. |
|
|
| 2.4
Investments |
|
| Long
term investments are stated at cost, provision for diminution in value |
|
| of
investment is made, if considered permanent. |
|
|
| Short
term investment are stated at lower of cost and market value. |
|
