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Askari Leasing
Annual Report 1998
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)Mohammad Afsar Chairman
Brig. (R) Muhammad Ayub Director
Brig. (R)Ghulam Ali Director
Brig. (R) Zafar Ahmed Director
Brig (R) Khalid Raza Director
Dr. Safdar Ali Butt Director
Mr. Shujal Ali Khan Director
Mr. Zahid Ali H. Jamali Director (NIT Nominee)
Chief Executive Mr. Taimur Afzal
Company Secretary Mr. Zafar Alam Khan Sumbal
Bankers Askari Commercial Bank Limited
American Express Bank Limited
ABN-AMRO Bank N.V.
ANZ Grindlays Bank Limited
The Bank of Punjab
Credit Agricole Indosuez
Citi Bank NA.
Deutsche Bank A. G.
Emirates Bank International P.J.S.C.
Habib American Bank
The Hong Kong and Shanghai Banking Corporation Limited
Standard Chartered Bank
Auditors Taseer Hadi Khalid & Co.
Chartered Accountants
Legal Advisor Walker Martineau Saleem
Mr. M. Hanif Bhatti
Registrar and Share
Transfer Office Askari Associates (Pvt.)Ltd.
6th Floor, AWT Plaza, The Mall, P.O. Box 678, Rawalpindi
Telephone: (051 ) 514370-71,516108
Fax: (051 ) 516109
E.Mail: askari@isb.compol.com
Registered
Office/Head Office 5th Floor, AWT Plaza,
The Mall, Rawalpindi.
Telephone: (051)511309-11,566153, 515289
UAN 111-111-345
Fax: (051) 565670
Notice of the Sixth Annual
General Meeting
Notice is hereby given that the Sixth Annual General Meeting of Askari Leasing Limited will be held on Friday,
December 18, 1998 at 9:30 a.m., in Blue Lagoon Complex, opposite Pearl Continental Hotel outward gate,
Rawalpindi, to transact the following business:-
1. To confirm the minutes of the 5th Annual General Meeting of the company held on November 29,
1997.
2. To receive, consider and adopt the Audited Accounts together with Directors' and Auditors' Reports
thereon for the year ended June 30, 1998.
3. To appoint Auditors of the company for the year ending June 30, t 999 and to fix their remuneration.
4. To approve the payment of 20% cash dividend (Rs. 2.00 per share) as recommended by the Board of
Directors for the year ended June 30, 1998.
5. To transact any other business with the permission of the Chair.
By Order of the Board
Dated: November 18, 1998 Zafar Alam Khan Sumbal
Place: Rawalpindi Company Secretary
NOTES:
1. Closure of Share Transfer Books
The Share Transfer Books of the company will be closed from December 09, 1998 to December 18,
1998 (both days inclusive). Cash dividend will be paid to the shareholders whose names appear on
the Register of members on December 09, 1998.
2. Change in Address and Consolidation of Folios
Members are requested to immediately notify the change of address, if any, and ask for consolidation
of folio numbers, provided any member holds more than one folio, to our Registrar, Askari Associates
(Private) Limited, 6th Floor, AWT Plaza, The Mall, Rawalpindi Cantt.
3. Participation in General Meeting
A member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend the meek
ing and vote for him / her. The form of proxy, duly completed, in order to be effective must be received
by the company at its Registered Office at least 48 hours before the meeting.
Directors' Report
The Board of Directors of your company has pleasure in presenting the Sixth Annual Report for the period
ended June 30, 1998.
Financial Results: (Rs. ('000)
Total Revenue 716,009
Total Expenditure 616,028
Profit for the period 99,981
Provision for taxation 28,000
Unappropriated profit brought forward 1,853
Profit available for appropriation 73,834
Transfer to statutory reserve 14,396
Proposed cash dividend 48,000
Transfer to general reserve 5,000
Unappropriated profit carried forward 64.38
Dividend
The Board of Directors has recommended a 20% cash dividend for the year ended June 30, 1998.
Review of Operations
We are pleased to report that as of June 30, 1998 your company has became the largest leasing company
in Pakistan. This remarkable goal has been achieved in a short period of five years with the single minded
devotion and hard work of the employees, strong support of our Certificates of Investment (COIs) holders, clear
direction of the Board and the strength of our gilt edge corporate brand name ASKARI. We are thankful to
Allah Almighty for this success.
While congratulating our shareholders on this remarkable achievement, we take the opportunity of apprising
them of the difficult times ahead. We forecast a major contraction in industrial investment in the next two years,
thus reducing leasing sector's ability to underwrite new leases. In 1997-98 total leases written by the leasing
companies amounted to approximately Rs. 6 billion. This volume is expected to diminish to around Rs. 4 bil-
lion in 1998-99. This drop in business will result in a smaller share for every leasing company, putting an
inevitable downward pressure on lease pricing. In this economic environment, we foresee growing pressures
on earning potential of leasing companies caused by shrinking margins and a need for making additional
provisions for doubtful accounts as more and more lessees get hit by economic recession. In addition, cer-
tain regulatory issues will also impact the financial performance of leasing companies in the next few years.
The management of your company is fully conscious of these issues and is competent to devise strategies to
move the company through turbulent times with minimum impact.
We are continuously exploring new products in order to sustain growth and profitability. We recently signed
up to be the franchise operators of Hertz Rent A-Car system in Pakistan. Hertz is the largest rent-a-car com-
pany in the world. We plan to start these operations in Karachi in the first quarter of 1999 and expand to
Lahore and Islamabad later that year. Our focus will be an daily and term rentals. This venture would firmly
place us in the operating lease business. Other avenues in operating leasing business are also being looked
into with a view to sustaining the pace of development recorded by your company so far.
Analyzing the operational results, lease income for the year was Rs. 594 million against Rs. 525 million last
year while total revenue was Rs. 716 million compared to Rs. 631 million in the previous year. Financial
charges were Rs. 530 million compared to Rs. 420 million last year, reflecting higher business volume and
slight increase in interest charges. Administration cost was higher by Rs. 8.7 million to Rs. 41 million, staying
constant at 0.8% of our total assets.
On 30 June 1998, total assets of the company increased from Rs. 4.0 billion, a year earlier, to Rs. 5.1 bil-
lion. Similarly, net investment in leases rose to Rs. 3.8 billion from Rs. 2.9 billion. COIs continued to be main-
stay for our funding requirements. In addition, we were the only leasing company to take advantage of the
favourable regulatory regime for the Term Finance Certificates (TFCs) in 1997-98. Your company raised
Rs. 250 million through this mode of finance. Our liquidity position was strong throughout the year. We con-
tinued to follow the policy of diversification in our lease portfolio with an objective to minimize risk. Our lease
investments during the year included Shell Pakistan Limited, Qasim International Terminal, Bata Pakistan
Limited, ANZ Grindlays, Dewan Group, Gatron Industries, etc., etc. Sector-wise lease analysis shows expo-
sure of 17% in Power, 14% in Service, 13% in Cement, 12% in Textile and 14% in Energy. The balance is
spread over 18 sectors. Geographically our lease portfolio was distributed between Karachi (44%) and
Lahore/Faisalabad (46%) while the balance was invested in Rawalpindi/Islamabad, Peshawar and Multan.
Our relationship with Volvo in financing their trucks is reflected in the increase in vehicle financing from 7% of
our portfolio in 1997 to 17% in 1998. Machinery, however, continued to be the largest chunk in assets
financed at 68% while equipment represented 17%.
We have continued our policy of sustained investment and commitment to information technology and human
resource. This investment has given us handsome returns and we believe is essential for future growth. The
Board is appreciative of the dedication and hard work of the employees in helping the company to achieve
its objectives.
Year 2000 Issue
The company has addressed the year 2000 compliance issue in relation to the computer hardware and soft-
ware. Necessary steps have been taken to ensure that the hardware and software can handle the millennium bug.
Auditors
The Auditors, M/s Taseer Hadi Khalid and Company, retire and being eligible offer themselves for reap-
pointment.
Pattern of Shareholding
The pattern of shareholding of the Company as at June 30, 1998 is shown on Page 23.
Acknowledgment
We wish to thank Corporate Law Authority, State Bank of Pakistan and other regulatory authorities for their
cooperation, guidance and support whenever sought.
Rawalpindi Lt. Gen. (R)Mohammad Afsar
November 12, 1998 CHAIRMAN
Auditors' Report to the Members
TASEER HADI KHALID & CO.
Chartered Accountants
We have audited the annexed balance sheet of Askari Leasing Limited as at 30 June 1998 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 account-
ing policies consistently applied;
ii) the expenditure incurred during the year was for the purpose of the company's busi-
ness; 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 posi-
tion, 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 1998 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 sec-
tion 7 of that Ordinance.
Islamabad November 12, 1998 Taseer Hadi Khalid & CO
Chartered Accountants
Balance Sheet
As at June 30, 1998
1998 1997
Rupees Rupees
Assets (in '000) (in '000)
Fixed Assets - Tangible 3 20,750 14,816
Long Term Advances 4 9,056 6,086
Deferred Costs 1,433 300
Long Term Investments 5 5,000 5,000
Net Investment in Lease Finance
Minimum lease payments 4,156,246 3,230,961
Add: Residual value 602,960 469,748
--------------- ---------------
4,759,206 3,700,709
Less: Unearned finance income 972,554 771,284
--------------- ---------------
Net investment in lease finance 6 3,786,652 2,929,425
Less: Current portion 1,221,712 734,257
--------------- ---------------
2,564,940 2,195,168
Current Assets 7 2,545,973 1,782,176
--------------- ---------------
5,147,152 4,003,546
========== ==========
Capital and Liabilities
Share Capital and Reserves
Share capital 8 240,000 200,000
Reserves 9 247,359 267,963
Unappropriated profit 6,438 1,853
--------------- ---------------
493,797 469,816
Redeemable Capital 10 166,667 --
Allowance for Potential Lease Losses 2.3 120,000 74,670
Provision for Deferred Taxation 18.2 20,000 --
Long Term Liabilities 11 1,897,162 2,118,780
Current Liabilities 12 2,449,526 1,340,280
--------------- ---------------
5,147,152 4,003,546
========== ==========
The annexed notes form an integral part of these accounts.
Rawalpindi Lt. Gen. (R) Mohammad Afsar Taimur Afzal
November 12, 1998 CHAIRMAN CHIEF EXECUTIVE
Profit and Loss Account
For the Year Ended June 30, 1998
1998 1997
Rupees Rupees
(in '000) (in '000)
Revenue
Lease income 13 593,665 524,528
Income from short term investments 46,003 58,296
Income from bank deposits 75,915 44,684
Other income 426 3,468
--------------- ---------------
716,009 630,976
Expenditure
Finance and bank charges 14 529,952 420,440
General and administrative expenses 15 40,746 32,079
Allowance for potential lease losses 45,330 43,382
--------------- ---------------
616,028 495,901
--------------- ---------------
Profit Before Taxation 99,981 135,075
Provision for taxation
Current 8,000 13,000
Prior years' -- 2,000
Deferred 20,000 --
--------------- ---------------
28,000 15,000
--------------- ---------------
Profit After Taxation 71,981 1201075
Unappropriated profit brought forward 1,853 1,793
--------------- ---------------
Profit Available for Appropriation 73,834 121,868
Appropriations
Transferred to reserve fund 14,396 24,015
Transferred to general reserve 5,000 56,000
Transferred to reserve for issue of bonus shares -- 40,000
Proposed dividend @ 20%(1997: Nil) 48,000 --
--------------- ---------------
67,396 120,015
--------------- ---------------
Un-appropriated Profit Carried Forward 6,438 1,853
========== ==========
The annexed notes form an integral part of these accounts
Rawalpindi Lt. Gen. (R) Mohammad Afsar Taimur Afzal
November 12, 1998 CHAIRMAN CHIEF EXECUTIVE
Statement of Changes in
Financial Position
For the Year Ended June 30, 1998
1998 1997
Rupees Rupees
(in '000) (in '000)
Cashflows from Operating Activities
Profit before taxation 99,981 135,075
Adjustments for:
Depreciation 6,117 2,904
Allowance for potential lease losses 45,330 43,382
Loss / (profit) on disposal of fixed assets 867 (21)
Amortization of deferred costs 867 200
Provision for diminution in value of equity investment 711 176
--------------- ---------------
53,034 46,641
--------------- ---------------
Operating Profit before working capital changes 153,015 181,716
(increase)/decrease in:
Short Term investments (51,645) (386,474)
Advances, prepayments and other receivables (92,089) 126,752
--------------- ---------------
143,734) (259,722)
(Decrease)/Increase in current liabilities (12,535) 62,445
--------------- ---------------
Net cash used in operating activities (3,254) (15,561)
Cashflows from Investing Activities
Purchase of operating fixed assets (12,062) (11,536)
Disposal of operating fixed assets 2 351
Long term advances (3,662) (5,710)
Investment in lease finance (857,227) (989,994)
--------------- ---------------
Net cash used in investing activities (872,949) (1,006,889)
Cashflows from Financing Activities
Deferred costs (2,000) --
Redeemable capital 252,694 --
Certificates of investment 579,038 653,212
Deposits on lease contracts 78,223 108,485
Loans from financial institutions 103,970 313,622
Dividend paid (3,095) (36,734)
--------------- ---------------
Net cash from financing activities 1,008,830 1,038,585
--------------- ---------------
Net increase in cash and cash equivalents 132,627 16,135
Cash and cash equivalents at the beginning of the year 58,714 42,579
--------------- ---------------
Cash and cash equivalents at the end of the year 191,341 58,714
========== ==========
Rawalpindi Lt. Gen. (R) Mohammad Afsar Taimur Afzal
November 12, 1998 CHAIRMAN CHIEF EXECUTIVE
Notes to the Accounts
For the Year Ended June 30, 1998
1. Company and its Operations
Askari Leasing Limited ("the company") was incorporated in Pakistan as a public limited company
on 1st 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.
2. Summary of Significant Accounting Policies
2.1 Accounting Convention
These accounts have been prepared under the historical cost convention.
2.2 Revenue Recognition
At the commencement of lease, the total unearned lease income consists of excess of aggregate
lease contract receivable over the cost of the leased asset. At the time a lease is executed, a por-
tion of unearned lease income which equals the allowance for potential lease losses is charged
to income. The remainder of unearned lease income is taken to income over the term of lease,
starting from the month in which the lease is executed, so as to produce a systematic return on the
net investment in the lease.
Profit on short term investments and bank deposits is accounted for on accrual basis.
2.3 Allowance for Potential Lease Losses
The allowance for potential lease Josses is maintained at a level which, in the judgement of the
management, is adequate to provide for potential Josses on lease portfolio that can be reasonably
anticipated. The allowance is increased by provisions charged to income and is decreased by
charge off, net of recoveries.
2.4 Fixed Assets and Depreciation
These are stated at cost less accumulated depreciation.
Depreciation is charged to income applying the straight line method whereby cost of the asset is
written off over its estimated useful life. In respect of additions and deletions of assets during the
year, depreciation is charged proportionately from the month of acquisition and upto deletion
respectively. Minor maintenance and repairs are charged to income as and when incurred.
Major renewals and improvements are capitalized and the assets so replaced, if any, are retired.
Gains and losses on disposal of assets, if any, are included in current year's income.
2.5 Investments
Long term
These are stated at cost. Provision for diminution in value of investments is made, if consid-
ered permanent.
Short term
These are stated at lower of average cost and market value determined on an aggregate
portfolio basis.
2.6 Taxation
The charge for current taxation is based on taxable income at the current tax rates after taking into
account tax credits and tax rebates available, if any. Deferred tax is accounted for by using the
liability method on all major timing differences excluding tax effect on those timing differences
which are not likely to reverse in the foreseeable future. As a measure of prudence, deferred tax
debits are not accounted for.
2.7 Deferred Costs
These are written off within a period of five years from the date of occurrence.
2.8 Foreign Currency Transactions
Transactions in foreign currencies are accounted for in rupees at the rates of exchange ruling on
the date of the transactions. Monetary assets and liabilities in foreign currencies are translated into
rupees at the rate of exchange ruling at the balance sheet date, except for liabilities covered under
State Bank of Pakistan exchange risk cover scheme, which are translated at contracted rates.
Exchange gains and losses are dealt within the profit and loss account.
2.9 Staff Retirement Benefits
The company operates a Staff Provident Fund scheme for all eligible employees and contributions
are made monthly in accordance with the rules of the scheme to cover its obligation.
3. Fixed Assets - Tangible
Particulars Cost Cost of Cost Accumulated Book Value Depreciation Rate of
as at additions/ as at depreciation as as at for the year/ Depre-
1 July 1997 (deletions) 30 June 1998 at 30 June 1998 30 June 1998 (on deletions) ciation %
Leasehold
improvements
and structures 7,125 5,305 12,430 5,279 7,151 2,687 33
Furniture 1,561 222 1,783 443 1,340 180 10
Office
equipment 9,160 3,503 12,636 4,775 7,861 2,159 20
(27) (16)
Motor vehicles 4,015 3,032 7,047 2,649 4,398 1,091 20
---------------------------------------------------------------------------------------------------------------------
1998 (Rs. '000) 21,861 12,062 33,896 13,146 20,750 6,117
---------------------------------------------------------------------------------------------------------------------
1997 (Rs. '000) 10,680 11,536 21,861 7,045 14, 816 2,904
(355) (25)
=========================================================================
3.1 Details of Disposals of Fixed Assets
Accumulated Sale (Loss/profit Particulars of
Description Cost depreciation Book value proceeds on disposal purchasers
Mobile Phone
1998: (Rs.) 27 16 11 2 (9) By negotiation Sheikh Rani
Enterprises.
I.I. Chundrigar
Road, Karachi
====================================================================================
1997: (Rs,) 355 25 330 351 21 -- --
====================================================================================
The (Ioss)/profit on disposal of fixed assets is included in income.
4. Long Term Advances - considered good 1998 1997
Rupees Rupees
(in '000) (in '000)
1,829 942
Chief Executive 6,450 4,985
Executives 1,966 656
Others --------------- ---------------
10,245 6,583
1,189 497
Less: Installments recoverable within one year --------------- ---------------
9,056 6,086
========== ==========
These are analyzed as follows:
8,908 5,380
Outstanding for over three years 148 706
Others --------------- ---------------
9,056 6,086
========== ==========
Maximum aggregate amount outstanding 9,461 5,191
during the year in respect of Chief Executive and Executives ========== ==========
4.1 Advance to Chief Executive represents an outstanding balance of house loan of Rs. 1 800,000
(1997: Rs. 900,000)and a personal advance of Rs. 60,500 (1997: Rs. 41,875) given in
accordance with the terms of agreement. The approval of the regulatory agency requires recov-
ery of house loan to be made within ten years from the date of disbursement. House loan carries
mark-up of 10% per annum.
Advances to executives represent house, transport and personal loans granted in accordance with
Employees' Service Regulations. These are repayable within a period of 2 to 20 years and carry
mark-up at rates ranging between 5% to 7.5% per annum.
5. Long Term Investments
This represents investment in 500,000 ordinary shares of Rs. 10 each as 10% investment in the
equity of Askari General Insurance Company Limited - an associated listed company. {market
value as at June 30, 1998 Rs. 5,500,000 (1997: Rs. 9,250,000)}
6. Net Investment in Lease Finance
This includes lease financing provided to the following customers having exposure of more than
20% of the company's equity at the year end.
Zaman Energy Limited 318 Million
Sui Northern Gas Pipelines Limited 177 Million
Gatron Industries Limited 184 Million
Gharibwal Cement Company Limited 122 Million
Shell Pakistan Limited 108 Million
7. Current Assets
1998 1997
Rupees Rupees
(in '000) (in '000)
Current portion of net investment in lease finance 1,221,712 734,257
Short term investments 7.1 880,751 829,817
Advances, prepayments and other receivables 7.2 252,169 159,388
Cash and bank balances 7.3 191,341 58,714
--------------- ---------------
2,545,973 1,782,176
========== ==========
7.1 Short Term Investments
Federal investment bonds 7.1.1 170,000 360,000
Musharika financing 7.1.2 1,864 45,023
Financing agreements 7.1.2 24,799 42,050
Repurchase agreements 7.1.2 2,058 15,439
Short term placements 7.1.3 495,456 365,000
NIT units 7.1.4 137,000 --
Term finance certificates 7.1.5 47,980 --
Equity investment 7.1.6 1,594 2,305
--------------- ---------------
880,751 829,817
========== ==========
7.1.1 This represents investments in federal investment bonds (FIBs) on which profit is receivable
semi-annually @ 15% per annum. These include FIBs of Rs. 65 million (1997: Rs. 250 mil-
lion) purchased under reverse repo arrangements.
7.1.2 These are secured against bank guarantees, lien an shares of listed companies and cer-
tificates of investment (COIs) issued by the company. The expected rate of profit ranges
from 19% to 22.60% per annum.
7.1.3 These are unsecured placement of funds with financial institutions. Rate of return on these
placements ranges between 18% to 21% per annum.
7.1.4 NIT units are purchased from financial institutions under reverse repo arrangements to meet
statutory liquidity requirement. The agreed sate price of these units is Rs. 141.12 million.
7.1.5 Term finance certificates - quoted
1998 1997
Rupees Rupees
(in '000) (in '000)
Gatron Industries Limited 20,000 --
200,000 certificates of Rs. 100 each
(Market value as at 30th June 1998: Rs. 20 million)
ICI Pakistan Limited 27,980 --
279,800 certificates of Rs. 100 each
(Agreed sale price under reverse repo
arrangement is Rs. 28.49 million) --------------- ---------------
47,980 --
========== ==========
7.1.6 Equity investment
Cost of investment 4,837 4,837
Less: Provision for diminution in value 3,243 2,532
--------------- ---------------
1,594 2,305
========== ==========
These represent investment in 352,000 ordinary shares of Rs. 10 each of Shifa
International Hospitals Ltd. {Market value Rs. 1,586,700 (1997: Rs. 2,291,900) and
500 ordinary shares of Rs. 10 each of Sitara Energy Ltd. {Market Value Rs. 7,500
(1997: Rs. 13,000)}
7.2 Advances, Prepayments and Other Receivables
Advances to employees 1,189 497
Advance against leases 7.2.1 126,387 74,000
Advance income tax 43,224 17,197
Other advances 5,026 2,487
Prepayments 9,346 13,548
Accrued income 47,085 28,931
Receivable from associated undertakings 7.2.2 11,095 11,982
Others 7.2.3 8,817 10,746
--------------- ---------------
252,169 159,388
========== ==========
7.2.1 This represents advances given to suppliers for assets to be leased on behalf of the lessees.
The lessees are being charged with mark-up of 55 to 63 paisas per thousand per day
against these advances.
7.2.2 These are made up as follows:
Army Welfare Trust 10,633 10,633
Askari General Insurance Company Limited 462 134.90
--------------- ---------------
11,095 11,982
========== ==========
The maximum aggregate amount receivable at the end of any month during the year from asso-
ciated undertakings was Rs. 12,071,802 (1997: Rs. 15,010,583).
7.2.3 This includes an amount of Rs. 4,220,211 (1997: Rs. 2,236,698} receivable from the
State Bank of Pakistan on premature termination of foreign exchange risk contracts and
foreign exchange rate differential.
7.3 Cash and Bank Balances
Cash in hand 83 1
Cash at bank
Current accounts with
State Bank of Pakistan 27,337 23,809
Commercial banks 847 6,787
Deposit accounts 160,726 28,117
Escrow account 2,348 --
--------------- ---------------
191,258 587.13
--------------- ---------------
191,341 58,714
========== ==========
8. Share Capital
8.1 Authorized Share Capital
50,000,000 ordinary shares of Rs. 10/- each 500,000 500,000
========== ==========
8.2 Issued, Subscribed and Paid up Share Capital
20,000,000 ordinary shares of Rs. l O/-
each fully paid in cash 200,000 200,000
4,000,000 (1997: Nil) ordinary shares of Rs. 10/-
each fully paid bonus shares 40,000 --
--------------- ---------------
240,000 200,000
========== ==========
9. Reserves
1998 (Rupees in '000) 1997 (Rupees in '000)
Reserve for Reserve for
General Reserve issue of bonus Total General Reserve issue of bonus Total
Reserve Fund shares Reserve Fund shares
Balance as at
1st July 166,000 61,963 40,000 267,963 110,000 37,948 -- 147,948
Transferred from Profit
and loss account 5,000 14,396 -- 19,396 56,000 24,015 40,000 120,015
----------------------------------------------------------------------------------------------------------------------------------------------------------
171,000 76359.00 40,000 287,359 166,000 61,963 40,000 267,963
Bonus shares issued -- -- 40,000 40,000 -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------------------------------
Balance as at 30th June 171,000 76,359 -- 247,359 166,000 61,963 40,000 267,963
=================================================================================================
The reserve fund is created by transferring 20% of the profit after tax. This reserve is required to be maintained under the regula-
tions for Non Banking Financial Institutions
10. Redeemable Capital
1998 1997
Rupees Rupees
(in '000) (in '000)
Term finance certificates 250,000 --
Less: Current portion 83,333 --
--------------- ---------------
166,667 --
========== ==========
These represent non-participatory and registered term finance certificates issued by the company
to commercial banks and financial institutions. Profit on these certificates is payable on semi-annu-
al basis al an expected rate of 17.1% per annum. Term finance certificates are redeemable in six
semi-annual installments. These are secured by charge on specific leased assets and related
receivables. Face value of each certificate is Rs. 1 million.
11. Long Term Liabilities
Certificates of investment 11.1 1,493,570 1,822,401
Deposits on lease contracts 11.2 317,056 283,879
Long term loans 11.3 86,536 12,500
--------------- ---------------
1,897,162 2,118,780
========== ==========
11.1 Certificates of Investment
Balance as at 30th June 2,960,184 2,381,146
Less: Current portion 1,466,614 558,745
--------------- ---------------
1,493,570 1,822,401
========== ==========
Balance of long term certificates of investment is made up as follows:
Certificates of investment 1,446,774 1,807,604
Profit payable 46,796 14,797
--------------- ---------------
1,493,570 1,822,401
========== ==========
The certificates of investment are issued for three months to five years period. The return
to the certificate holders is paid ranging from 15% to 18.6% per annum on profit and
loss sharing basis.
11.2 Deposits on Lease Contracts
Balance as at 30th June 387,212 308,989
Less: Current portion 70,156 25,110
--------------- ---------------
317,056 283,879
========== ==========
These represent security deposits received against leases in accordance with the
contracts. These are refundable/adjustable at the expiry/termination of the respective
leases.
11.3 Long Term Loans
These are made up as follows:
Emirates Bank International P.J.S.C 11.3.1 83,332 --
Emirates Bank International P.J.S.C 11.3.2 40,000 --
ANZ Grindlays Bank Limited 11.3.3 12,500 20, 833
Standard Chartered Bank -- 8,3 33
--------------- ---------------
135,832 29,166
Less: Current portion 49,296 16,666
--------------- ---------------
86,536 12,500
========== ==========
11.3.1 This represents a term finance facility of Rs. 100 million. The facility is repayable along-
with mark-up in 12 quarterly installments. The facility carries mark-up of 47.26 paisas per
thousand per day, and is secured by first charge on specific leased assets and related
receivables.
11.3.2 This represents a facility of Rs. 40 million repayable in 48 equal monthly installments. The
facility carries a mark up of 46.58 paisas per thousand per day and is secured by assign-
ment of lease rentals.
11.3.3 This represents a term finance facility repayable in six semiannual installments. The facil-
ity carries a markup of 47.95 paisas per thousand per day and is secured by first charge
on specific leased assets and related receivables.
12. Current Liabilities
Current portion of redeemable capital 10 83,333 --
Certificates of investment 11.1 1,466,614 558,745
Deposits on lease contracts 11.2 70,156 25,110
Current portion of long term loans 11.3 49,296 16,666
Short term facilities 12.1 566,768 578,726
Creditors 12.2 13,362 15,358
Accrued mark-up on loans 17,701 9,280
Accrued profit on certificates of investment 78,510 89,610
Other accrued liabilities 399 2,555
Provision for taxation 35,400 27,400
Unclaimed dividend 171 3,266
Proposed dividend 48,000 --
Other liabilities 19,816 13,564
--------------- ---------------
2,449,526 1,340,280
========== ==========
1998 1997
Rupees Rupees
(in '000) (in '000)
12.1 These are made up as follows:
Standard Chartered Bank 12.1.1 91,831 19,847
American Express Bank Limited 12.1.2 53,793 77,720
Credit Agricole Indosuez 12.1.3 733 82
Credit Agricole Indosuez 12.1.4 45,000 45,000
The Hong Kong Shanghai Banking
Corporation Limited 12.1.5 49,659 36,077
Citibank N.A. 12.1.6 77,950 --
Abn Amro Bank N.V. 12.1.7 17,822 --
Others 12 1.8 229,980 250,000
Deutsche Bank A.G. -- 50,000
Crescent Investment Bank Limited -- 100,000
--------------- ---------------
566,768 578,726
========== ==========
12.1.1 This working capital finance facility of Rs. 90 million (1997: Rs. 30 Million) is secured
against specific leased assets and related receivables and carries mark-up of 45.21
(1997: 47.95) paisas per thousand per day.
12.1.2 This demand finance facility of Rs. 70 million (1997: Rs. 100 million) for a six month peri-
od on a roll over basis is secured against specific leased assets and related receivables
and carries mark-up of 45.21 (1997: 47.95) paisas per thousand per day.
12.1.3 This short term running finance facility of Rs. 15 million is secured against specific leased
assets and related receivables and carries mark-up of 48.63 paisas per thousand per day.
12.1.4 This short term finance facility of Rs. 45 million for a period of one year on a roll over basis
is secured against specific leased assets and related receivables and carries mark-up of
48.63 paisas per thousand per day.
12.1.5 This running finance facility of Rs. 50 million for a period of one year on a roll over basis
is secured against specific leased assets and related receivables and carries mark-up of
46 paisas per thousand per day.
12.1.6 This demand finance facility of Rs. 100 million for a period of one year is secured against
specific leased assets and related receivables and carries mark-up of 46.58 paisas per
thousand per day.
12.1.7 This running finance facility of Rs. 30 million for a period of one year is secured against
specific leased assets and related receivables and carries mark-up of 48.90 paisas per
thousand per day.
12.1 8 This represents borrowings for the purchase of Government Securities, NIT Units and TFCs
under reverse repo arrangements. These carry costs ranging from 4.2 paisas to 5.2 paisas
per thousand per day.
12.2 This includes an amount of Rs. 65,142 (1997: Rs. 65,394) due to an associated company.
13. Lease Income
Lease income is recognized in accordance with the accounting policy explained in Note 2.2.
14. Finance and Bank Charges
1998 1997
Rupees (Rupees)
(in '000) in '000)
Profit on certificates of investment 436,038 353,589
Mark-up on bank borrowings 89,542 61,219
Bank charges and commission 4,372 5,632
--------------- ---------------
529,952 420,440
========== ==========
15. General and Administrative Expenses
Salaries, allowances and benefits 14,831 9,949
Rent 3,711 3,135
:Staff training 561 184
Travelling and vehicle running 2,148 1,196
Insurance of operating assets 1,500 921
Legal and professional charges 2,131 2,647
Telephone and utilities 3,522 3,298
Donations 15.1 125 66
Subscription 103 53
Auditors' remuneration 15.2 145 135
Printing and stationery 1,012 1,439
Depreciation 6,117 2,904
Repairs and maintenance 368 328
Advertisement 2,505 5,364
Provision for diminution in value of equity investment 711 176
Amortization of deferred costs 867 200
General expenses 389 84
--------------- ---------------
40,746 32,079
========== ==========
15.1 Donations
The directors and their spouses do not have any interest in the donee institutions.
15.2 Auditors' Remuneration
Audit fee 80 70
Tax consultancy fee 55 55
Out of pocket expenses 10 10
--------------- ---------------
145 135
========== ==========
16. Remuneration of Chief Executive, Directors and Executives
The aggregate amount charged in the accounts for remuneration, including certain benefits to
the Directors, Chief Executive and other Executives of the company is as follows:
1998 (Rupees in '000) 1997 (Rupees in '000)
Directors Chief Executives Directors Chief Executives
Executive Executive
Managerial Remuneration -- 534 2,274 -- 534 2,006
Housing and utilities -- 294 1,363 -- 294 1,100
Medical expenses -- 54 247 -- 54 193
Provident fund contribution -- 44 206 -- 44 158
--------------------------------------------------------------------------------------------------------------------
Meeting fees 23 -- -- 7 -- --
--------------------------------------------------------------------------------------------------------------------
23 926 4,090 7 926 3,457
--------------------------------------------------------------------------------------------------------------------
No of persons 8 1 13 8 1 14
Company maintained cars are provided to the Chief Executive and other Executives.
17. Transactions with Associated Undertakings
These comprise of the following:
Askari Commercial Bank Limited
Balance of deposit accounts as at 30th June 121,371 28,472
Profit on deposit accounts 1,548 1,022
Askari General Insurance Company Limited
Insurance premium paid 1,736 240
Insurance claims received 7 346
Balance of certificates of investments as at 30th June 21,600 29,600
Profit paid on COIs 1,122 3,707
Army Welfare Trust
Balance of certificates of investments as at 30th June 1,900 1,900
Profit paid on COIs 353 18,203
Arrangement fee paid 397 2,516
Rent paid for office premises 3,654 2,715
1998 1997
Rupees Rupees
(in '000) (in '000)
Mobil Askari Lubricants (Pvt.) Limited
Amount due against leases as at 30th June 8,092 8,069
Finance income charged during the year 4,093 1,393
Askari Aviation (Pvt.) Limited
Balance of certificates of investment as at 30th June 2,000 1,000
Profit paid on COIs 248 86
Askari Associates (Pvt.) Limited
Paid for registrar services 346 578
18. Provision for Taxation
18.1 Current
Income tax assessments for the periods ended 31 December 1993 and June 30, 1995
(Assessment year 1994-95 and 1995-96) have been finalized by the income tax department
creating net demands of Rs. 2.2 million and Rs. 16.7 million, respectively. The company has
filed appeals against these assessments with the Commissioner of Income Tax Appeals. The
management is confident of a favourable resolution of these assessments.
18.2 Deferred
Deferred taxation arising out of timing differences between accounting and income tax revenue
or charges is estimated at Rs. 77 million (1997: Rs. 65 million) In the opinion of the manage-
ment, these timing differences are not expected to reverse in the foreseeable future. However,
keeping in view the provisions of revised International Accounting Standard for Income Taxes
(IAS12) and as a matter of prudence a provision for deferred taxation amounting to Rs. 20 mil-
lion has been made in the financial statements.
19. Contingencies and Commitments
The company has given undertakings for the payment of Rs. 53 million (1997: Rs. 3 million)
approximately, for the retirement of L/C documents on behalf of lessees.
20. Figures
20.1 Figures have been rounded off to the nearest thousand rupees
20.2 Corresponding figures have been rearranged, wherever necessary, for purposes of
comparison.
Rawalpindi Lt. Gen (R) Mohammad Afsar Taimur Afzal
November 12, 1998 CHAIRMAN CHIEF EXECUTIVE
Pattern of Shareholding
As at June 30, 1998
Number of           Share Holding Total
Shareholders From To Shares Held
29 1 100 2280
201 101 500 52460
318 501 1000 202280
897 1001 5000 1631000
85 5001 10000 595460
100 10001 Above 21516520
--------------- --------------- --------------- ---------------
1630 Totals 24000000
========== ========== ========== ==========
Categories of Number of Shares Percentage
Share Holders Share Holders Held
Individuals 1591 5661600 23.59
Investment Companies 6 159000 0.66
Insurance Companies 6 933480 3.89
Joint Stock Companies 9 2348640 9.79
Financial Institutions 6 1951880 8.13
Modaraba Companies 4 42300 0.17
Foreign Companies 4 10800 0.05
Charitable Trusts 2 12889200 53.71
Others 2 3100 0.01
--------------- --------------- ---------------
Total 1630 24000000 100.00
========== ========== ==========
Financial Highlights
1994 - 1998
(Rupees in thousands)
Dec 94 Jun 95 Jun 96 Jun 97 Jun 98
Full Year (6 Months) Full Year Full Year Full Year
Audited Audited Audited Audited Audited
BALANCE SHEET
Authorized Capital 100,000 500,000 500,000 500,000 500,000
Paid-up Capital 100,000 200,000 200,000 200,000 240,000
Total Equity 164,075 194,004 349,742 469,816 493,797
Allowance for Potential Lease Losses 11,313 14,067 31,287 74,670 120,000
Long Term & Deferred Liabilities 567,655 430,123 1,238,570 2,118,780 2,083,829
Current Liabilities 337,045 616,539 1,119,343 1,340,280 2,449,526
Net Investment in Leases 769,152 896,023 1,915,476 2,929,425 3,786,652
Current Assets 470,560 653,884 1,302,790 1,782,176 2,545,973
Total Assets 1,080,088 1,310,733 2,738,942 4,003,546 5,147,152
INCOME STATEMENT
Lease Income 115,253 86,728 312,582 524,528 593,665
Total Revenue 160,736 114,480 379,289 630,976 716,009
Financial Expenses 83,549 67,343 236,489 420,440 529,952
Profit Before Taxation 58,414 37,029 100,238 135,075 99,981
Profit After Taxation 57,565 29,929 95,738 120,075 71,981
FINANCIAL RATIOS
Earning per Share* 5.84 7.41 6.68 6.75 4.54
Return on Equity* 43.18% 41.36% 36.87% 32.96% 20.75%
Leverage 5.58 5.47 6.83 7.52 9.42
*Calculated on profit before taxation & on annualised basis.
Branch Network
KARACHI 3rd Floor, AWT Plaza,
I.I. Chundrigar Road, Karachi.
Telephone: (021) 2634614-5, 2627347-8
Fax: (021) 2630338
LAHORE 4 Corps, Garrison Mess,
Tufail Road, Lahore Cantt., Lahore
Telephone: (042)6673384, 6667784-5
Fax: (042) 6673385
ISLAMABAD 2nd Floor, Ali Plaza, l-E,
Jinnah Avenue, Islamabad.
Tel: (051) 822037-279565
Fax: (051) 821399
PESHAWAR 32, The Mall, Peshawar,
Tel: (091)279497, 275421
Fax: (091)275423
LIAISON OFFICES Karachi Road, Faisalabad,
Tel: (041) 601595-6
Fax: (041 ) 601597
2nd Floor, Jalil Center
Abdali Road, Multan,
Tel: (061 ) 547862
Fax: (061) 547862
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