| Askari Leasing |
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| Annual
Report 1998 |
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| Contents |
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| Corporate
Information |
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| Notice
of Meeting |
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| Directors'
Report |
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| Auditors'
Report |
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| Balance
Sheet |
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| Profit
and Loss Account |
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| Statement
of Changes in Financial Position |
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| Notes
to the Accounts |
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| Pattern
of Shareholding |
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| Financial
Highlights |
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| Corporate
Information |
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| Board
of Directors |
Lt. Gen. (R)Mohammad Afsar |
Chairman |
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Brig. (R) Muhammad Ayub |
Director |
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Brig. (R)Ghulam Ali |
Director |
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Brig. (R) Zafar Ahmed |
Director |
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Brig (R) Khalid Raza |
Director |
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Dr. Safdar Ali Butt |
Director |
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Mr. Shujal Ali Khan |
Director |
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Mr. Zahid Ali H. Jamali |
Director (NIT Nominee) |
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| Chief
Executive |
Mr. Taimur Afzal |
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| Company
Secretary |
Mr. Zafar Alam Khan
Sumbal |
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| Bankers |
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Askari Commercial Bank
Limited |
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American Express Bank
Limited |
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ABN-AMRO Bank N.V. |
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ANZ Grindlays Bank
Limited |
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The Bank of Punjab |
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Credit Agricole Indosuez |
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Citi Bank NA. |
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Deutsche Bank A. G. |
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Emirates Bank
International P.J.S.C. |
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Habib American Bank |
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The Hong Kong and
Shanghai Banking Corporation Limited |
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Standard Chartered Bank |
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| Auditors |
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Taseer Hadi Khalid &
Co. |
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Chartered Accountants |
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| Legal
Advisor |
Walker Martineau Saleem |
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|
Mr. M. Hanif Bhatti |
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| Registrar
and Share |
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| Transfer
Office |
Askari Associates
(Pvt.)Ltd. |
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6th Floor, AWT Plaza, The
Mall, P.O. Box 678, Rawalpindi |
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Telephone: (051 )
514370-71,516108 |
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Fax: (051 ) 516109 |
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E.Mail:
askari@isb.compol.com |
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| Registered |
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| Office/Head
Office |
5th Floor, AWT Plaza, |
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The Mall, Rawalpindi. |
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Telephone:
(051)511309-11,566153, 515289 |
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UAN 111-111-345 |
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Fax: (051) 565670 |
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| Notice
of the Sixth Annual |
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| General
Meeting |
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| Notice
is hereby given that the Sixth Annual General Meeting of Askari Leasing
Limited will be held on Friday, |
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| December
18, 1998 at 9:30 a.m., in Blue Lagoon Complex, opposite Pearl Continental
Hotel outward gate, |
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| Rawalpindi,
to transact the following business:- |
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| 1.
To confirm the minutes of the 5th Annual General Meeting of the company held
on November 29, |
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| 1997. |
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| 2.
To receive, consider and adopt the Audited Accounts together with Directors'
and Auditors' Reports |
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| thereon
for the year ended June 30, 1998. |
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| 3.
To appoint Auditors of the company for the year ending June 30, t 999 and to
fix their remuneration. |
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| 4.
To approve the payment of 20% cash dividend (Rs. 2.00 per share) as
recommended by the Board of |
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| Directors
for the year ended June 30, 1998. |
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| 5.
To transact any other business with the permission of the Chair. |
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By Order of the Board |
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| Dated:
November 18, 1998 |
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Zafar Alam Khan Sumbal |
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| Place:
Rawalpindi |
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Company Secretary |
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| NOTES: |
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| 1.
Closure of Share Transfer Books |
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| The
Share Transfer Books of the company will be closed from December 09, 1998 to
December 18, |
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| 1998
(both days inclusive). Cash dividend will be paid to the shareholders whose
names appear on |
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| the
Register of members on December 09, 1998. |
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| 2.
Change in Address and Consolidation of Folios |
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| Members
are requested to immediately notify the change of address, if any, and ask
for consolidation |
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| of
folio numbers, provided any member holds more than one folio, to our
Registrar, Askari Associates |
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| (Private)
Limited, 6th Floor, AWT Plaza, The Mall, Rawalpindi Cantt. |
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| 3.
Participation in General Meeting |
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| A
member entitled to attend and vote at the meeting is entitled to appoint a
proxy to attend the meek |
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| ing
and vote for him / her. The form of proxy, duly completed, in order to be
effective must be received |
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| by
the company at its Registered Office at least 48 hours before the meeting. |
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| Directors'
Report |
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| The
Board of Directors of your company has pleasure in presenting the Sixth
Annual Report for the period |
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| ended
June 30, 1998. |
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| Financial
Results: |
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(Rs. ('000) |
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| Total
Revenue |
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716,009 |
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| Total
Expenditure |
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616,028 |
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| Profit
for the period |
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99,981 |
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| Provision
for taxation |
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28,000 |
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| Unappropriated
profit brought forward |
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1,853 |
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| Profit
available for appropriation |
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73,834 |
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| Transfer
to statutory reserve |
|
14,396 |
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| Proposed
cash dividend |
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48,000 |
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| Transfer
to general reserve |
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5,000 |
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| Unappropriated
profit carried forward |
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64.38 |
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| Dividend |
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| The
Board of Directors has recommended a 20% cash dividend for the year ended
June 30, 1998. |
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|
| Review
of Operations |
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| We
are pleased to report that as of June 30, 1998 your company has became the
largest leasing company |
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| in
Pakistan. This remarkable goal has been achieved in a short period of five
years with the single minded |
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| devotion
and hard work of the employees, strong support of our Certificates of
Investment (COIs) holders, clear |
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| direction
of the Board and the strength of our gilt edge corporate brand name ASKARI.
We are thankful to |
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| Allah
Almighty for this success. |
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| While
congratulating our shareholders on this remarkable achievement, we take the
opportunity of apprising |
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| them
of the difficult times ahead. We forecast a major contraction in industrial
investment in the next two years, |
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| thus
reducing leasing sector's ability to underwrite new leases. In 1997-98 total
leases written by the leasing |
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| companies
amounted to approximately Rs. 6 billion. This volume is expected to diminish
to around Rs. 4 bil- |
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| lion
in 1998-99. This drop in business will result in a smaller share for every
leasing company, putting an |
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| inevitable
downward pressure on lease pricing. In this economic environment, we foresee
growing pressures |
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| on
earning potential of leasing companies caused by shrinking margins and a need
for making additional |
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| provisions
for doubtful accounts as more and more lessees get hit by economic recession.
In addition, cer- |
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| tain
regulatory issues will also impact the financial performance of leasing
companies in the next few years. |
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| The
management of your company is fully conscious of these issues and is
competent to devise strategies to |
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| move
the company through turbulent times with minimum impact. |
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| We
are continuously exploring new products in order to sustain growth and
profitability. We recently signed |
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| up
to be the franchise operators of Hertz Rent A-Car system in Pakistan. Hertz
is the largest rent-a-car com- |
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| pany
in the world. We plan to start these operations in Karachi in the first
quarter of 1999 and expand to |
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| Lahore
and Islamabad later that year. Our focus will be an daily and term rentals.
This venture would firmly |
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| place
us in the operating lease business. Other avenues in operating leasing
business are also being looked |
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| into
with a view to sustaining the pace of development recorded by your company so
far. |
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| Analyzing
the operational results, lease income for the year was Rs. 594 million
against Rs. 525 million last |
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| year
while total revenue was Rs. 716 million compared to Rs. 631 million in the
previous year. Financial |
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| charges
were Rs. 530 million compared to Rs. 420 million last year, reflecting higher
business volume and |
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| slight
increase in interest charges. Administration cost was higher by Rs. 8.7
million to Rs. 41 million, staying |
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| constant
at 0.8% of our total assets. |
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| On
30 June 1998, total assets of the company increased from Rs. 4.0 billion, a
year earlier, to Rs. 5.1 bil- |
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| lion.
Similarly, net investment in leases rose to Rs. 3.8 billion from Rs. 2.9
billion. COIs continued to be main- |
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| stay
for our funding requirements. In addition, we were the only leasing company
to take advantage of the |
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| favourable
regulatory regime for the Term Finance Certificates (TFCs) in 1997-98. Your
company raised |
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| Rs.
250 million through this mode of finance. Our liquidity position was strong
throughout the year. We con- |
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| tinued
to follow the policy of diversification in our lease portfolio with an
objective to minimize risk. Our lease |
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| investments
during the year included Shell Pakistan Limited, Qasim International
Terminal, Bata Pakistan |
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| Limited,
ANZ Grindlays, Dewan Group, Gatron Industries, etc., etc. Sector-wise lease
analysis shows expo- |
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| sure
of 17% in Power, 14% in Service, 13% in Cement, 12% in Textile and 14% in
Energy. The balance is |
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| spread
over 18 sectors. Geographically our lease portfolio was distributed between
Karachi (44%) and |
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| Lahore/Faisalabad
(46%) while the balance was invested in Rawalpindi/Islamabad, Peshawar and
Multan. |
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| Our
relationship with Volvo in financing their trucks is reflected in the
increase in vehicle financing from 7% of |
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| our
portfolio in 1997 to 17% in 1998. Machinery, however, continued to be the
largest chunk in assets |
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| financed
at 68% while equipment represented 17%. |
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| We
have continued our policy of sustained investment and commitment to
information technology and human |
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| resource.
This investment has given us handsome returns and we believe is essential for
future growth. The |
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| Board
is appreciative of the dedication and hard work of the employees in helping
the company to achieve |
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| its
objectives. |
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| Year
2000 Issue |
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| The
company has addressed the year 2000 compliance issue in relation to the
computer hardware and soft- |
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| ware.
Necessary steps have been taken to ensure that the hardware and software can
handle the millennium bug. |
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| Auditors |
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| The
Auditors, M/s Taseer Hadi Khalid and Company, retire and being eligible offer
themselves for reap- |
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| pointment. |
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| Pattern
of Shareholding |
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| The
pattern of shareholding of the Company as at June 30, 1998 is shown on Page
23. |
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| Acknowledgment |
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| We
wish to thank Corporate Law Authority, State Bank of Pakistan and other
regulatory authorities for their |
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| cooperation,
guidance and support whenever sought. |
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| Rawalpindi |
|
Lt. Gen. (R)Mohammad Afsar |
|
| November
12, 1998 |
|
CHAIRMAN |
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|
| Auditors'
Report to the Members |
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| TASEER
HADI KHALID & CO. |
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| Chartered
Accountants |
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| We
have audited the annexed balance sheet of Askari Leasing Limited as at 30
June 1998 and the related |
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| profit
and loss account and the statement of changes in financial position, together
with the notes forming part |
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| thereof,
for the year then ended and we state that we have obtained all the
information and explanations |
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| 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 |
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| Companies
Ordinance, 1984; |
|
|
| b)
in our opinion: |
|
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| i)
the balance sheet and profit and loss account, together with the notes
thereon have |
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| 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- |
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| ing
policies consistently applied; |
|
|
| ii)
the expenditure incurred during the year was for the purpose of the company's
busi- |
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| ness; and |
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|
|
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| 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- |
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| 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 |
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| 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 |
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|
|
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| d)
in our opinion, Zakat deductible at source under the Zakat and Ushr
Ordinance, 1980 was |
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| deducted
by the company and deposited in the Central Zakat Fund established under sec- |
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| tion
7 of that Ordinance. |
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|
| Islamabad
November 12, 1998 |
|
Taseer Hadi Khalid & CO |
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|
|
|
Chartered Accountants |
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|
|
| Balance
Sheet |
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| As
at June 30, 1998 |
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|
1998 |
1997 |
|
|
|
Rupees |
Rupees |
|
| Assets |
|
|
(in '000) |
(in '000) |
|
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|
|
| 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 |
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|
| Net
Investment in Lease Finance |
|
| Minimum
lease payments |
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|
4,156,246 |
3,230,961 |
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| Add:
Residual value |
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|
602,960 |
469,748 |
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|
--------------- |
--------------- |
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4,759,206 |
3,700,709 |
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| Less:
Unearned finance income |
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|
972,554 |
771,284 |
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|
--------------- |
--------------- |
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| Net
investment in lease finance |
6 |
3,786,652 |
2,929,425 |
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| Less:
Current portion |
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|
1,221,712 |
734,257 |
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|
--------------- |
--------------- |
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|
2,564,940 |
2,195,168 |
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| Current
Assets |
|
7 |
2,545,973 |
1,782,176 |
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|
--------------- |
--------------- |
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|
5,147,152 |
4,003,546 |
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|
========== |
========== |
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|
| Capital
and Liabilities |
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| Share
Capital and Reserves |
|
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| 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 |
|
|
|
|
--------------- |
--------------- |
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|
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|
5,147,152 |
4,003,546 |
|
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|
========== |
========== |
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| 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 |
|
