| Asian Leasing Company Limited |
|
|
|
|
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|
|
| Annual
Report 1998 |
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| CONTENTS |
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| Company
Information |
|
| Notice
of the Meeting |
|
|
| Directors'
Report |
|
|
| Pattern
of Shareholding |
|
|
| Auditors'
Report |
|
|
| Balance
Sheet |
|
|
| Profit
and Loss Account |
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|
| Statement
of Sources and Application of Funds |
|
| Notes
to the Accounts |
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|
| COMPANY
INFORMATION |
|
|
| Board
of Directors: |
|
| Mr.
Zafar Iqbal |
|
Chairman |
|
| Mr.
Mohammad Zafarullah Khan |
|
Director |
|
| Brig.
(Retd) Mian Akhtar Hameed |
|
Director |
|
| Mr,
Mohammad Aslam |
|
Director |
|
| Mr.
Razi-ur-Rehman Khan |
|
Nominee Director- NIT |
|
| Mr.
Muhammad Bilal Sheikh |
|
Nominee Director - NDFC |
|
| Mr.
Javed Sadiq |
|
Nominee Director- NDFC |
|
| Mr.
Shahid Hassan |
|
Nominee Director-NDFC |
|
| Mrs.
Roohi Raees Khan |
|
Chief Executive Officer /
Director |
|
|
| Company
Secretary: |
|
|
| Mr.
Imran-ur-Rehman |
|
|
| Bankers
to the Company: |
|
| National
Development Finance Corporation |
|
| Bank
of Punjab |
|
| Crescent
Investment Bank Limited |
|
| Faysal
Bank Limited |
|
| Muslim
Commercial Bank Limited |
|
| National
Bank of Pakistan |
|
|
| Auditors: |
|
| Ford,
Rhodes, Robson, Morrow |
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| Chartered
Accountants |
|
|
| Legal
Advisor: |
|
| Khawaja
M. Azeem |
|
| Advocate,
High Court |
|
|
| Registrars
and Share Transfer Office: |
|
| Noble
Computer Services (Private) Ltd. |
|
| 6th
Floor, Hirani Centre, |
|
| I.I.
Chundrigar Road, Karachi. |
|
|
| Registered
Office & Head Office: |
|
| 12-Ahmed
Block, |
|
| New
Garden Town,. Lahore. |
|
| Tel:
5882806-9 |
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| Fax:
(042)5882669 |
|
| Email:
alc@brain.net.pk |
|
|
| Branch Office: |
|
| 204-Clifton
Centre, |
|
| Khayaban-e-Roomi,
Clifton, Karachi.
~ |
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| Tel:
5835936, 5866095 |
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| Fax:
(021) 5873573 |
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|
|
| NOTICE
OF ANNUAL GENERAL MEETING |
|
|
| Notice
is hereby given that the TWELFTH ANNUAL GENERAL MEETING of ASIAN LEASING
CORPORATION |
|
| LIMITED
will be held on Monday, 28th December, 1998 at the registered office of the
Company at 12-Ahmed |
|
| Block,
New Garden Town, Lahore at 10.00 a.m. to transact the following business ' |
|
|
| 1.To
confirm the minutes of 1 lth Annual General Meeting of the Company held on
30th December, 1997. |
|
|
| 2.To
receive, consider and adopt the audited accounts for the year ended June 30,
1998 together with the |
|
| Directors'
and Auditors' reports thereon. |
|
|
| 3.To
appoint Auditors and fix their remuneration. The present Auditors, Messrs.
Ford, Rhodes, Robson, |
|
| Morrow,
Chartered Accountants, retire and being eligible, offer themselves for
re-appointment. |
|
|
| 4.To
transact any other business with the permission of the Chair. |
|
|
| BY
ORDER OF THE BOARD |
|
|
| Lahore: |
|
IMRAN-UR-REHMAN |
|
| 8th
October, 1998. |
|
COMPANY SECRETARY |
|
|
| NOTES: |
|
|
| 1.The
Register of Members of the Company will remain closed from 23rd December,
1998 to 29th December, |
|
| 1998
(both days inclusive) and no transfer of shares will be made during the
period the register is closed. |
|
|
| 2.A
member entitled to attend and vote at the General Meeting is entitled to
appoint one person as his proxy |
|
| to
attend and vote on his behalf. |
|
|
| 3.Instrument
appointing proxy and the power of attorney or other authority under which it
is signed or a |
|
| notarially
certified copy of the power or authority must be deposited at the registered
office of the Company |
|
| atleast
48 hours before the time of the meeting. |
|
|
| 4.Shareholders
are requested to notify any change in address immediately. |
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|
|
| DIRECTORS'
REPORT TO THE MEMBERS |
|
|
| The
Board of Directors presents to its members the 12th Annual Report together
with Audited Accounts and the |
|
| Auditors'
Report thereon for the year ended June 30, 1998. |
|
|
| The
past twelve months of economic turmoil that developed in South East Asia
affected many countries in the region. |
|
| In
Pakistan the expected turn around in the economy could not materialize.
During the year under review, the |
|
| profitability
of most of the leasing companies was adversely affected due to disturbed
investment climate, substantial |
|
| increase
in the borrowing and operating costs. The general "Wait and See"
policy adopted by the business combined |
|
| with
substantial devaluation of the rupee are factors which are likely to put
further pressure on the financial sector |
|
| including
leasing companies, which rely mainly on foreign credit lines. This source of
funding has become difficult to |
|
| tap
in the last year or so. The situation is not likely to improve very much in
the coming year. The liquidity problems of |
| DFl's/Banks
made it difficult for the leasing companies to avail financing facilities
from these traditional lenders. The |
| Corporation
was however able to raise Rs. 50.000 million credit line from a local DFI. |
|
|
| The
growth of the Corporation in the first five to six years is comparable with
the majority of the leasing companies. |
|
| However
a general decline has been witnessed in the last few years. This has been for
various reasons, of which the |
|
| major
one has been unavailability of funds through credit lines. Almost all the
leasing companies which have |
|
| sustained
a growth pattern over the past three to five years have mainly relied on the
foreign credit lines. |
|
|
| ALC,
since its inception has endeavored to grow gradually and continuously in
order to maintain a quality portfolio. |
|
| This
growth continued till 1993 - 94 whereafter it was stunted due to
unavailability of funds, which is the life line of |
|
| the
leasing companies. The deteriorating stock market conditions and slowing of
economy in general did not allow |
|
| ALC
to go for increase in its Paid-up Capital, which factor hindered obtaining
foreign credit lines and the operations |
|
| declined
during 1995-1998 and effected the return to the shareholders. |
|
|
| However,
the quality of lease investment as well as sectoral / asset exposure has been
well maintained due to |
|
| which
a healthy recovery rate was possible. The Corporation was also able to meet
its commitments with local as |
|
| well
as foreign lenders. |
|
|
| FINANCIAL
RESULTS |
|
|
| The
financial results of the company for the year under review and comparative
figures for the last two years are |
|
| summarized
below: |
|
|
1995-96* |
1996-97 |
1997-98 |
|
|
(Rs.) |
(Rs.) |
(Rs.) |
|
|
|
|
| Revenue |
|
135,973,224 |
81,609,860 |
57,507,647 |
|
| Expenditure |
|
|
|
| Financial
Charges |
|
79,709,257 |
45,296,571 |
30,269,079 |
|
| Provisions
/ Bad Debts |
|
5,789,116 |
9,883,181 |
21,153,298 |
|
| Others |
|
18,305,521 |
14,698,934 |
14,673,206 |
|
| Profit/(Loss)
before Tax |
|
32,169,330 |
11,731,174 |
(8,587,936) |
|
| Taxation |
|
(19,400,000) |
(19,500,000) |
(44,510,667) |
|
| Profit/(Loss)
after tax |
|
12,769,330 |
(7,768,826) |
(53,098,603) |
|
| *18 months |
|
|
| The
financial position of the company started declining over 1995 - 98 mainly
owing to unavailability of funds to write |
|
| the
required additional leases in the past three years or so. This, together with
deteriorating performance of many
:~:-: |
| industrial
sectors, especially cement, textile and engineering resulted in recovery
problems as lease rentals could not |
|
| be
realized on time. Hence the provisioning of Rs. 21.4 million which added to
the over all loss of the Corporation. |
|
|
| The
tax formula applicable to the leasing companies requires provisioning of
taxation as the lease investment |
|
| reduces
and depreciation advantage is lost. Like most leasing companies, the deferred
taxation was not fully |
|
| provided
for by ALC in the initial years with the hope that increase in lease
investments in the future years would |
|
| reduce
the requirement for deferred taxation which unfortunately did not
materialize. However in order to present the |
|
| accounts
in accordance with the requirements of Corporate Law Authority (CLA) and
International Accounting |
|
| Standards
(IAS) full provision of Rs. 22.9 million has been made in 1997-98. In
addition to the above, a tax provision |
|
| of
Rs. 21.6 million has been made in accordance with Income Tax Ordinance, 1979. |
|
|
| FUTURE
OUTLOOK |
|
| Keeping
the mushroom growth of leasing companies in Pakistan, many with a small
capital base, ALC Board in |
|
| March,
1998, decided to look into the possibility of a merger in the larger interest
of the lease financing sector. Such |
|
| a
pioneering step, it was hoped, would set an example for the other leasing
companies to follow and allow a |
|
| healthier
lease financing industry to emerge. |
|
|
| Due
to the reasons elaborated above and the requirement of CLA to raise paid-up
capital up to Rs. 200 million in the |
|
| year
1999, the Board of Directors of your Corporation has decided to bring about
the amalgamation of operations |
|
| with
First Leasing Corporation Limited (FLCL) for which a Memorandum of
Understanding(MOU) has been signed |
|
| on
June 19, 1998 and the Scheme of Arrangement has been drafted which after an
agreement on a swap ratio will |
|
| be
presented to the members/shareholders. The trend of
"Amalgamation/Mergers" in the lease financing sector will |
|
| be
witnessed in the coming two years when this sector consolidates. |
|
|
| After
the proposed merger of ALC and FLCL, one of the largest leasing company in
Pakistan, in terms of paid-up |
|
| capital,
will emerge. With strong capital base and gross lease investment, the merged
Corporation would be able to |
|
| attract
local as well as multilateral financial institutions for obtaining credit
lines. It is hoped that some other leasing |
| companies
may also come forward and further strengthen this merger. |
|
|
| CHANGE
IN BOARD / MANAGEMENT |
|
| Mr.
Mohammad Aslam Khan, Chairman ALC due to his ill health, retired and
nominated Mr. Zafar Iqbal who was |
|
| elected
as the new Chairman of ALC in March, 1998. |
|
|
| In
view of the expected amalgamation of ALC and FLCL operations, Mr. Muhammad
Aslam relinquished charge from |
|
| ALC
w.e.f. July 12, 1998 and Mrs. Roohi R. Khan was appointed the new Chief
Executive Officer to facilitate the |
|
| proposed amalgamation of
ALC with FLCL. |
|
|
| COMPLIANCE
WITH CLA REQUIREMENT ON YEAR 2000 |
|
| ALC
has already substantially rectified its computerized systems to meet the CLA
requirement for the millennium |
|
| problem.
It is expected that this requirement would be fully met shortly. |
|
|
| PATTERN
OF SHAREHOLDING |
|
| The
Pattern of share holding of the Company is annexed. |
|
|
| AUDITORS |
|
| The
present Auditors M/s. Ford, Rhodes, Robson, Morrow, Chartered Accountants
retire and being eligible offer |
|
| themselves
for re-appointment. |
|
|
| ACKNOWLEDGEMENT |
|
| The
company is thankful to the authorities of the State Bank of Pakistan,
Corporate Law Authority, our valuable |
|
| clients,
financial institutions and shareholders for their continued support and
co-operation. Appreciation is also |
|
| placed
on record for the dedicated hard work put in by the staff of the Corporation. |
|
|
| ON
BEHALF OF THE BOARD |
|
|
| Lahore |
|
ROOHI R. KHAN |
|
| October
8, 1998 |
|
CHIEF EXECUTIVE |
|
|
|
| PATTERN
OF SHARE HOLDINGS AS AT JUNE 30, 1998 |
|
|
|
Shareholding |
|
| Number of |
From |
To |
Total Shares Held |
|
| Shareholders |
|
|
|
| 315 |
1 |
100 |
14,811 |
|
| 366 |
101 |
500 |
90,540 |
|
| 153 |
501 |
1,000 |
112,771 |
|
| 325 |
1,001 |
5,000 |
619,697 |
|
| 48 |
5,001 |
10,000 |
334,220 |
|
| 5 |
10,001 |
15,000 |
56,103 |
|
| 2 |
15,001 |
20,000 |
35,738 |
|
| 3 |
20,001 |
25,000 |
64,852 |
|
| 1 |
25,001 |
30,000 |
26,136 |
|
| 1 |
40,001 |
45,000 |
41,817 |
|
| 1 |
45,001 |
50,000 |
47,844 |
|
| 1 |
50,001 |
55,000 |
52,272 |
|
| 1 |
55,001 |
60,000 |
55,806 |
|
| 2 |
65,001 |
70,000 |
134,489 |
|
| 1 |
70,001 |
75,000 |
72,600 |
|
| 1 |
75,001 |
80,000 |
79,514 |
|
| 1 |
100,001 |
105,000 |
104,544 |
|
| 1 |
120,001 |
125,000 |
121,000 |
|
| 1 |
145,001 |
150,000 |
155,300 |
|
| 3 |
260,001 |
265,000 |
783,004 |
|
| 2 |
520,001 |
525,000 |
1,045,440 |
|
| 1 |
525,001 |
530,000 |
527,720 |
|
| 1 |
565,001 |
570,000 |
569,329 |
|
| 1 |
2,610,001 |
2,615,000 |
2,612,600 |
|
| 1 |
2,695,001 |
2,700,000 |
2,696,253 |
|
| ---------- |
---------- |
---------- |
---------- |
|
| 1238 |
|
10,454,400 |
|
| ========== |
========== |
========== |
========== |
|
|
|
| CATEGORIES
OF SHAREHOLDERS AS AT JUNE 30, 1998 |
|
|
| Categories
of Shareholders |
Number |
Shares Held |
Percentage |
|
| INDIVIDUALS |
|
1,213 |
3,609,024 |
34.522 |
|
| INVESTMENT
COMPANIES |
4 |
263,073 |
2.516 |
|
| INSURANCE
COMPANIES |
2 |
611,146 |
5.846 |
|
| JOINT
STOCK COMPANIES |
9 |
378,199 |
3.618 |
|
| FINANCIAL
INVESTORS |
3 |
5,381,453 |
51.475 |
|
| MO DARABA |
|
4 |
95,636 |
0.915 |
|
| FOREIGN
INVESTORS |
0 |
0 |
0 |
|
| CO-OPERATIVE
SOCIETIES |
2 |
112,733 |
1.078 |
|
| CHARITABLE
TRUSTS |
1 |
3,136 |
0.030 |
|
| OTHERS |
|
0 |
0 |
0 |
|
|
--------- |
--------- |
--------- |
|
| Total |
|
1,238 |
10,454,400 |
100.000 |
|
|
========== |
========== |
========== |
|
|
|
|
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
|
| We
have audited the annexed balance sheet of Asian Leasing Corporation Limited
as at June 30, |
|
| 1998
and the related profit and loss account and statement of source and
application of funds, together with the |
|
| notes
forming part thereof, for the year then ended and we state that we have
obtained all the information and |
|
| explanations
which to the best of our knowledge and belief were necessary for the purposes
of our audit and, after |
|
| due
verification thereof, we report that: |
|
|
| (a)
in our opinion, proper books of account have been kept by the company as
required by the Companies |
|
| Ordinance,
1984; |
|
|
| (b)
in our opinion: |
|
|
| i)
the balance sheet and profit and loss account together with the notes thereon
have been drawn up |
|
| in
conformity with the Companies Ordinance, 1984, and are in agreement with the
books of |
|
| account
and are further in accordance with accounting policies consistently applied; |
|
|
| ii)
the expenditure, incurred during the year was for the purpose of the
Company's business; and |
|
|
| iii)
the business conducted, investments made and the expenditure incurred during
the year were in |
|
| accordance
with the objects of the Company; |
|
|
| (c)in
our opinion and to the best of our information and according to the
explanations given to us, the balance |
|
| sheet,
profit and loss account and the statement of source and application of funds,
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, 1998 |
|
| and
of the loss and the changes in source and application of funds for the year
then ended; and |
|
|
| (d)
in our opinion no Zakat was deductible at source under Zakat and Ushr
Ordinance, 1980. |
|
|
| Lahore: |
|
FORD RHODES, ROBS ON,
MORROW |
|
| October
8, 1998. |
|
CHARTERED ACCOUNTANTS |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 1998 |
|
|
|
Notes |
1998 |
1997 |
|
| CAPITAL
AND RESERVES |
|
Rupees |
Rupees |
|
| Authorised
capital |
|
|
|
| 25,000,000
(1997: 25,000,000) ordinary shares of |
|
250,000,000 |
250,000,000 |
|
| Rs.10/-
each |
|
========== |
========== |
|
| Issued,
subscribed and paid-up capital |
4 |
104,544,000 |
104,544,000 |
|
|
|
|
|
| Special
Reserve |
|
5 |
7,104,821 |
7,104,821 |
|
| General
Reserve |
|
31,336,477 |
31,336,477 |
|
| Unappropriated
loss |
|
(60,867,429 |
(7,768,826 |
|
|
|
--------- |
--------- |
|
|
(22,426,131 |
30,672,472 |
|
|
|
--------- |
--------- |
|
|
82,117,869 |
135,216,472 |
|
| LONG
TERM AND DEFERRED LIABILITIES |
|
|
|
| Long
term loans- secured |
|
6 |
52,639,036 |
78,459,557 |
|
| Obligation
under finance lease |
|
7 |
193,381 |
- |
|
| Marginal
deposits on lease arrangements |
8 |
33,258,916 |
47,651,652 |
|
| Customers'
deposits - COIs |
|
9 |
575,000 |
1,725,000 |
|
| Provision
for gratuity |
|
25,277 |
55,085 |
|
| Provision
for deferred taxation |
|
22,900,000 |
- |
|
|
|
--------- |
--------- |
|
|
109,591,610 |
127,891,294 |
|
|
| CURRENT
LIABILITIES |
|
| Current
maturity of long term loans |
|
69,627,277 |
93,865,603 |
|
| Current
maturity of obligation under finance lease |
112,109 |
- |
|
| Current
maturity of marginal deposits |
8 |
19,984,764 |
20,794,920 |
|
| Short
term loans- secured |
|
10 |
- |
15,000,000 |
|
| Short
term customers' deposits- COIs |
|
11 |
- |
2,702,400 |
|
| Accrued
liabilities |
|
557,431 |
322,078 |
|
| Mark-up
accrued on secured loans |
|
1,200,511 |
2,912,469 |
|
| Mark-up
accrued on Certificates of Investment |
|
17,654 |
86,678 |
|
| Provision
for taxation |
|
42,788,462 |
32,967,541 |
|
| Provision
against Corporate Assets Tax |
|
2,610,667 |
- |
|
| Central
Excise duty payable |
|
145,596 |
65,286 |
|
| Others |
|
797,800 |
469,223 |
|
| Dividends |
|
240,306 |
246,846 |
|
|
138,082,577 |
169,433,044 |
|
| CONTINGENCIES
AND COMMITMENTS |
|
12 |
- |
- |
|
|
--------- |
--------- |
|
|
329,792,056 |
432,540,810 |
|
|
========= |
========= |
|
|
|
|
| TANGIBLE
FIXED ASSETS |
|
13 |
5,974,703 |
5,209,982 |
|
|
| INVESTMENT
IN LEASE FINANCE |
|
| Lease
payments receivable |
|
268,374,847 |
387,327,080 |
|
| Residual
value |
|
53,346,258 |
67,791,891 |
|
|
--------- |
--------- |
|
| Gross
lease payments receivable |
|
321,721,105 |
455,118,971 |
|
| Less:
Unearned mark-up |
|
(55,898,189 |
(82,087,583 |
|
|
--------- |
--------- |
|
| Net
investment in lease finance |
|
265,822,916 |
373,031,388 |
|
| Less:
Current maturity |
|
(105,638,175 |
(154,790,934 |
|
| Provision
for doubtful receivables |
|
(17,681,126 |
(7,293,921 |
|
|
--------- |
--------- |
|
|
142,503,615 |
210,946,533 |
|
|
| LONG
TERM INVESTMENTS |
|
14 |
8,617,000 |
8,888,000 |
|
|
|
|
|
| DEFERRED
COST |
|
15 |
2,069,538 |
1,733,787 |
|
|
| CURRENT
ASSETS |
|
|
| Current
portion of net investment in lease finance |
105,638,175 |
154,790,934 |
|
| Short
term finances - secured |
|
16 |
2,266,573 |
17,326,540 |
|
| Other
investments |
|
17 |
10,000,000 |
- |
|
| Advances,
deposits, prepayments and other |
|
|
| receivables |
|
18 |
18,218,602 |
14,347,939 |
|
| Cash
and bank balances |
|
19 |
34,503,850 |
19,297,095 |
|
|
|
--------- |
--------- |
|
|
170,627,200 |
205,762,508 |
|
|
--------- |
--------- |
|
|
329,792,056 |
432,540,810 |
|
|
========= |
========= |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
Chief Executive |
Director |
|
|
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 1998 |
|
|
|
Notes |
1998 |
1997 |
|
|
|
Rupees |
Rupees |
|
|
| Income
from lease operations |
|
20 |
48,284,177 |
72,018,354 |
|
| Mark-up
income |
|
21 |
7,468,206 |
8,703,596 |
|
| Other
income |
|
22 |
1,755,264 |
887,910 |
|
|
---------- |
---------- |
|
|
57,507,647 |
81,609,860 |
|
| EXPENDITURE |
|
|
| Direct
cost of leases |
|
23 |
27,431 |
79,552 |
|
| Financial
charges |
|
24 |
30,269,079 |
45,296,571 |
|
| Administrative
and operating expenses |
25 |
11,805,615 |
12,395,475 |
|
| Depreciation |
|
13 |
1,377,993 |
1,225,502 |
|
| Deferred
costs - Amortised |
|
15 |
1,187,167 |
998,405 |
|
| Provision
for doubtful receivables |
|
21,153,298 |
9,883,181 |
|
| Provision
for diminution in value of investment |
|
275,000 |
- |
|
|
---------- |
---------- |
|
|
66,095,583 |
69,878,686 |
|
|
---------- |
---------- |
|
| (Loss)
/ profit before tax |
|
(8,587,936) |
11,731,174 |
|
| Taxation |
|
26 |
(44,510,667) |
(19,500,000) |
|
|
---------- |
---------- |
|
| Loss
after tax |
|
(53,098,603) |
(7,768,826) |
|
| Unappropriated
loss brought forward |
|
(7,768,826) |
- |
|
|
---------- |
---------- |
|
| Unappropriated-loss
carried forward |
|
(60,867,429) |
(7,768,826) |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
|
Chief Executive |
|
Director |
|
|
|
|
| STATEMENT
OF SOURCES AND APPLICATION OF FUNDS (CASH FLOW) |
|
| FOR
THE YEAR JUNE 30, 1998 |
|
|
|
1998 |
1997 |
|
|
Rupees |
Rupees |
|
| CASH
FLOWFROM OPERATING ACTIVITIES |
|
|
| Net
loss after taxation |
|
(53,098,603) |
(7,768,826) |
|
| Adjustment
for: |
|
|
| Depreciation |
|
1,377,993 |
1,225,502 |
|
| Amortisation
of deferred costs |
|
1,187,167 |
998,405 |
|
| (Profit)
on sale of fixed assets |
|
(1,398,077) |
(259,852) |
|
| Provision
for doubtful receivables |
|
21,153,298 |
9,883,181 |
|
| Provision
for deferred tax |
|
22,900,000 |
- |
|
| Provision
for diminution in value of investments |
|
275,000 |
- |
|
|
|
45,495,381 |
11,847,236 |
|
|
---------- |
---------- |
|
| Operating
profit before working capital changes |
|
-7,603,222 |
4,078,410 |
|
| (Increase)/decrease
in: |
|
| Short
term finances (other than provision for doubtful |
|
| and
current portion) |
|
569,249 |
802,313 |
|
| Other
investment |
|
(10,000,000) |
- |
|
| Advances,
deposits, prepayments and other |
|
| receivable
(other than provision for doubtful) |
|
(14,649,255 |
(1,471,973) |
|
|
|
(24,080,006) |
(669,660) |
|
|
--------- |
--------- |
|
| Increase/(Decrease)
in: |
|
|
| Current
liabilities (other than current maturity |
|
| of
long term loan, COl's and dividends) |
|
(5,407,554) |
13,013,575 |
|
|
--------- |
--------- |
|
| Cash
generated from operation |
|
(37,090,782) |
16,422,325 |
|
| Gratuity
paid |
|
(29,808) |
- |
|
|
--------- |
--------- |
|
| NET
CASH FROM OPERATING ACTIVITIES |
|
(37,120,590) |
16,422,325 |
|
|
|
Brought forward |
|
(37,120,590) |
16,422,325 |
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
|
| Acquisition
of fixed assets |
|
(2,271,230 |
(1,991,580) |
|
| Sale
proceeds of fixed assets |
|
1,526,595 |
311,382 |
|
| Deferred
costs |
|
(1,522,917 |
(548,328) |
|
| Net
investment in lease finance recovered |
|
125,508,892 |
176,854,714 |
|
| Net
investment in lease finance provided |
|
(18,300,420 |
(87,962,748) |
|
| Marginal
deposits on lease arrangements received |
|
2,087,053 |
11,235,642 |
|
| Marginal
deposits on lease arrangements repaid |
|
(17,289,945) |
(20,500,035) |
|
| Long
term investments |
|
(4,000) |
(3,000,000) |
|
| Long
term finances |
|
14,503,217 |
4,449,563 |
|
|
---------- |
---------- |
|
| Net
Cash used in Investing Activities |
|
104,237,245 |
78,848,610 |
|
|
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
| Obligation
under lease finance |
|
382,000 |
- |
|
| Repayment
of obligation under lease finance |
|
(76,510) |
- |
|
| Dividends |
|
(6,540) |
(10,227,904) |
|
| Long
term loans |
|
50,000,000 |
37,000,000 |
|
| Customer's
deposits- COIs |
|
(2,150,000 |
(2,975,000) |
|
| Repayment
of long term loans |
|
(100,058,850) |
(126,851,188) |
|
|
---------- |
---------- |
|
| Net
cash used in financing activities |
|
(51,909,900) |
(103,054,092) |
|
|
---------- |
---------- |
|
| Net
(decrease)/increase in cash and cash equivalents |
15,206,755 |
(7,783,157) |
|
| Cash
and bank balances at the beginning of the year |
19,297,095 |
27,080,252 |
|
|
---------- |
---------- |
|
| Cash
and bank balances at the end of the year |
|
34,503,850 |
19,297,095 |
|
|
========== |
========== |
|
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE YEAR ENDED JUNE 30, 1998 |
|
|
| 1.
THE COMPANY AND ITS OPERATIONS |
|
|
| The
company is a public limited company and is listed on the Karachi, Lahore and
Islamabad Stock |
|
| Exchanges.
The company is engaged in the business of lease financing. |
|
|
| These
accounts comply with International Accounting Standards in all material
respects. |
|
|
| 3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
|
|
|
| 3.1
Accounting convention |
|
| The
financial statements are prepared under the historical cost convention. |
|
|
| 3.2
Tangible fixed assets and depreciation |
|
| Fixed
assets for own use are stated at cost less accumulated depreciation.
Depreciation on these |
|
| assets
is calculated applying the straight line method whereby the cost of assets is
written off over |
|
| estimated
useful lives. |
|
|
| A
full one year depreciation is charged in the year of addition and no
depreciation is charged in the |
|
| year
of deletion. |
|
|
| Repairs
and maintenance costs are expensed out as and when incurred, however, major |
|
| betterments
are capitalised. |
|
|
| 3.3
Deferred costs |
|
| These
costs are to be written off over a period of five years from the year of
incurrence. |
|
|
| 3.4
Taxation |
|
| Current
tax provision is based on profits as adjusted for tax purposes after taking
into account all |
|
| available
allowances and credits. |
|
|
| The
company determines deferred tax on all major timing differences using the
liability method |
|
| (Note: 26). |
|
|
| 3.5
Revenue recognition |
|
|
| The
company recognises all "sale and lease back" and "direct
leases" as finance leases. |
|
| Accordingly,
the excess of aggregate lease rentals over the net investments in the cost of
leased |
|
| assets
is deferred and amortised to income over the term of the lease, so as to
produce a |
|
| systematic
return on the net investment in leases. Mark-up income on morabaha finances
is |
|
| recognised
on receivable basis as stated in their respective agreements. Front end fees
(project |
|
| examination
fees) are taken to income on receipt basis while commitment fees are recorded
on |
|
| accrual
basis. Other income is accounted for when it becomes receivable. |
|
|
| 3.6
Foreign currency translation |
|
|
| Transactions
in foreign currencies are accounted for at the rates prevailing on the date
of |
|
| transaction.
Assets and liabilities in foreign currencies are translated at the rate of
exchange |
|
| prevailing
on the balance sheet date except for foreign currency loans registered under
the |
|
| Exchange
Risk Cover Scheme of the Government of Pakistan which are, if any, recorded
at the |
|
| rate
prevailing on the date of disbursement. Exchange difference, if any, arising
from translation at |
|
| year
end rates is taken to profit and loss account. |
|
|
| 3.7
Staff retirement benefits |
|
|
| The
company had established an unfunded gratuity scheme for all permanent
employees uptil |
|
| March,
1992 whereafter the scheme of Recognized Provident Fund has been introduced
in place |
|
| of
gratuity scheme under a trust established for this purpose. |
|
|
| 3.8
Provision for doubtful receivables |
|
|
| The
company makes a provision for doubtful receivables equivalent to 2% (1997:2%)
of net lease |
|
| receivables,
including advances against leases and long/short term finances, in pursuance
to loan |
|
| conditions
of Asian Development Bank (Note: 7.1). |
|
|
| Provision
for doubtful receivables is made at the higher of SBP's Rules of Business (
Prudential |
|
| Regulations
) or 2% as specified by Asian Development Bank on an aggregate basis. |
|
|
| 3.9
Long term investments |
|
| These
are stated at average cost. However, average cost is reduced to recognise any
decline |
|
| thereof,
other than temporary. |
|
|
|
1998 |
1997 |
|
|
Rupees |
Rupees |
|
|
|
|
| 4.
ISSUED, SUBSCRIBED AND PAID-UP CAPITAL |
|
|
| 5,000,000
(1997: 5,000,000) ordinary shares of |
|
| Rs.
10/- each fully paid in cash |
|
50,000,000 |
50,000,000 |
|
| 5,454,400
(1997: 5,454,400) ordinary shares of |
|
| Rs.10
each issued as fully paid bonus shares |
|
54,544,000 |
54,544,000 |
|
|
---------- |
---------- |
|
|
104,544,000 |
104,544,000 |
|
|
========== |
========== |
|
| 5.
SPECIAL RESERVE |
|
|
| Opening
and closing balance |
|
7,104,821 |
7,104,821 |
|
|
========== |
========== |
|
|
|
|
| This
represents special reserve created under Rule-3 of SBP's Rules of Business
(Prudential Regulations) |
|
| for
Non-Banking Financial Institutions. |
|
|
| 6.
LONG TERM LOANS - SECURED |
|
|
| Foreign
Currency Loans |
|
| Asian
Development Bank - |
|
|
| Loan
No. 1 (Note: 6.1) |
|
- |
5,598,755 |
|
| Loan
No. 2 (US $ 1,750,003) Note: 6.2) |
|
48,553,731 |
80,922,529 |
|
| Loan
No. 3 (Note: 6.3) |
|
- |
7,754,364 |
|
|
| Local
Currency Loans |
|
| National
Development Finance Corporation- |
|
| Loan
No. 4 (Note: 6.4) |
|
- |
5,000,000 |
|
| Loan
No. 5 (Note: 6.5) |
|
- |
7,272,726 |
|
| Loan
No. 6 (Note: 6.6) |
|
8,333,332 |
16,666,666 |
|
| Loan
No. 7 (Note: 6.7) |
|
50,000,000 |
- |
|
| Crescent
Investment Bank Ltd.- |
|
|
|
| Loan
No. 2 (Note: 6.8) |
|
1,666,670 |
5,000,002 |
|
| Loan
No. 3 (Note: 6.9) |
|
2,500,003 |
5,833,335 |
|
| Loan
No. 4 (Note: 6.10) |
|
6,666,668 |
10,000,000 |
|
| Al-Faysal
Investment Bank Limited (Note: 6.11) |
|
- |
7,500,000 |
|
| Muslim
Commercial Bank Ltd. |
|
|
|
| Loan
No. 1 (Note: 6.12) |
|
908,909 |
4,545,453 |
|
| Loan
No. 2 (Note: 6.13) |
|
3,637,000 |
7,273,000 |
|
| Fidelity
Investment Bank Ltd. (Note: 6.14) |
|
- |
3,333,330 |
|
| Prudential
Commercial Bank Ltd. (Note: 6.15) |
|
- |
5,625,000 |
|
|
--------- |
--------- |
|
|
122,266,313 |
172,325,160 |
|
| Less:
Current Maturity |
|
69,627,277 |
93,865,603 |
|
|
--------- |
--------- |
|
|
52,639,036 |
78,459,557 |
|
|
========= |
========= |
|
|
|
|
| 6.1
A.D.B. Loan No. 1 |
|
| This
represented the balance of a loan of US $ 3,000,000 sanctioned by Asian
Development Bank |
|
| for
financing of lease operations and it was repaid during the year. |
|
|
| 6.2
A.D.B. Loan No. 2 |
|
| This
represents the balance of a loan of US $ 7,000,000 sanctioned by Asian
Development Bank |
|
| for
financing of lease operations. |
|
|
| The
loan carries interest at the rate of 9.4% per annum, payable semi-annually on
15th June and |
|
| 15th
December in each year. |
|
|
| The
loan is repayable in 11 equal semi-annual instalments of US $ 583,333 each
commencing on |
|
| June
15, 1994 and one final installment of US $ 583,337. |
|
|
| The
loan is secured by (i) a pari-passu floating charge on the leased assets
purchased out of the |
|
| proceeds
of the loan, (ii) hypothecation of moveable assets and receivables of the
company and |
|
| (iii)
demand promissory note. |
|
|
| The
conditions of the loan agreement requires the company to, inter alia,
maintain (i) a debt equity |
|
| ratio
not exceeding 10: 1, (ii) a debt service coverage ratio equalling or
exceeding 1.25: 1, (iii) a |
|
| provision
for doubtful accounts equivalent to 2% of the total risk assets as defined in
the |
|
| agreement,
(iv) not to distribute more than 60% of the unrestricted after tax profits of
any year, (v) |
|
| to
maintain, at all times, a current ratio equal to at least 1.25:1 and (vi) to
maintain, at all times, in |
|
| cash
or Government Securities an amount equivalent in value at least 10% of the
principal amount |
|
| of
outstanding Certificates of Investment. |
|
|
| 6.5
A.D.B. Loan No. 3 |
|
| This
represented the balance of a loan of US $ 2,000,000 sanctioned by Asian
Development Bank |
|
| for
financin9 lease operations and it was repaid during the year. |
|
|
| 6.4
N.D.F.C. Loan No. 4 |
|
| The
loan was obtained under a sale and repurchase agreement for financing the
leasing |
|
| operations
of the company. |
|
|
| The
sale price of Rs.20,000,000 had a repurchase price of Rs. 31,509,608/- which
was repaid |
|
| during
the year. |
|
|
| 6.5
N.D.F.C. Loan No. 5 |
|
| The
loan was obtained under a sale and repurchase agreement for financing the
leasing |
|
| operations
of the company. |
|
|
| The
sale price of Rs. 20,000,000 had a repurchase price of Rs. 27,380,540 which
was repaid during |
|
| the year. |
|
|
| 6.6
N.D.F.C. Loan No. 6 |
|
| This
loan has been obtained under a sale and repurchase agreement for financing
the leasing |
|
| operations
of the company. |
|
|
| The
sale price of Rs. 25,000,000 has a repurchase price of Rs. 33,937,900 which
is repayable in 6 |
|
| equal
half-yearly instalments commencing from November 26, 1996. |
|
|
| The
payment of the repurchase price is secured by way of (a) hypothecation charge
on the entire |
|
| assets
and undertakings of the company, (b) mortgage charge on all the present and
future fixed |
|
| assets
of the company and (c) demand promissory note. |
|
|
| 6.7
N.D.F.C. Loan No. 7 |
|
| The
loan of Rs. 50,000,000 has been obtained under a sale and repurchase
agreement for |
|
| financing
the leasing operations of the company. The repurchase price is Rs. 79,271,070
which is |
|
| repayable
in 6 equal half yearly instalments commencing from December 15, 1998. |
|
|
| The
payment of the repurchase price is secured by way of (a) hypothecation charge
on the entire |
|
| assets
and undertakings of the company, (b) mortgage charge on all the present and
future fixed |
|
| assets
of the company, (c) floating charge on the business, undertaking and all
other property and |
|
| assets
of the company, and (d) demand promissory note. |
|
|
| 6.8
Crescent Investment Bank Ltd. - 2 |
|
| This
facility of Rs. 10.00 million has been obtained for the financing leasing
operations of the |
|
| company. |
|
|
| The
facility carries mark-up @ 19% p.a. This facility is repayable in 12 equal
quarterly instalments |
|
| commencing
from January 09, 1996. |
|
|
| The
loan is secured against: |
|
|
| (a)
first charge on fixed assets of the company. |
|
| (b)
undertaking that if the promissory note is not paid upon maturity, company
shall become |
|
| liable
to pay liquidated damages @ 20% p.a. for each day the payment is delayed. |
|
| (c)
demand promissory note. |
|
|
| 6.9
Crescent Investment Bank Ltd. - 3 |
|
| This
facility of Rs. 10.00 million has been obtained for the financing leasing
operations of the |
|
| company.
The facility carries mark-up @ 18.5% p.a. This facility is repayable in 12
equal quarterly |
|
| instalments
commencing from May 27, 1996. |
|
| The
loan is secured against: |
|
| (a)
first charge on fixed assets of the company |
|
| (b)
undertaking that if the promissory note is not paid upon maturity, company
shall become |
|
| liable
to pay liquidated damages @ 19.5% p.a. for each day the payment is delayed. |
|
|
| 6.1
Crescent Investment Bank Ltd. - 4 |
|
| This
facility of Rs. 10.00 million has been obtained for the financing leasing
operations of the |
|
| company. |
|
| The
facility carries mark-up @ 21% p.a. This facility is repayable in 12 equal
quarterly instalments |
|
| commencing
from August 26, 1997. |
|
| The
loan is secured against: |
|
| (a)
first charge on fixed assets of the company. |
|
| (b)
undertaking that if the promissory note is not paid upon maturity, company
shall become |
|
| liable
to pay liquidated damages @ 22% p.a. each day payment is delayed. |
|
|
| 6.11
M-Faysal Investment Bank Ltd. |
|
| The
morabaha finance facility was obtained for financing the leasing operations
of the company. |
|
| The
sale price of Rs. 9,500,000 had a repurchase price of Rs.11,647,671 which was
repaid during |
|
| the year. |
|
|
| 6.12
Muslim Commercial Bank Ltd. - 1 |
|
| The
demand finance facility of Rs. 10.00 million has been obtained for financing
the leasing |
|
| operations
of the company. The facility carries mark-up @ 18.25% p.a. The facility is
repayable in |
|
| 11
equal quarterly instalments commencing from March 31, 1996. The loan is
secured against first |
|
| pari
passu charge on the current/fixed including leased assets of the company to
extent of |
|
| Rs.12.00
(M). |
|
|
| 6.13
Muslim Commercial Bank Ltd. - 2 |
|
| The
demand finance facility of Rs. 10.00 million has been obtained for financing
the leasing |
|
| operations
of the company. |
|
|
| The
facility carries mark-up @ 18.98% p.a. This facility is repayable in 11 equal
quarterly |
|
| instalments
commencing from September 30, 1996. The loan is secured against first pari
passu |
|
| charge
on current/fixed assets of the company. |
|
|
| 6.14
Fidelity Investment Bank Ltd. |
|
| The
placement line of the Rs.20.00 million has been obtained for financing the
leasing operations |
|
| of
the company. The facility carries mark-up @ 19% per annum. This facility is
repayable in 12 |
|
| equal
quarterly instalments commencing from March 26, 1995. The facility is secured
against |
|
| charge
on leased assets of the company. |
|
|
|
| 6.15
Prudential Commercial Bank Ltd. |
|
| The
demand finance facility of Rs. 7.500 million has been obtained for working
capital requirement. |
|
| The
facility carries mark-up @ 20% per annum. This facility is repayable in 8
equal quarterly |
|
| instalments
commencing from March 01, 1997. The facility is secured against registered |
|
| hypothecation
charge on assets and receivables/book debts of the company for Rs. 10.00
million. |
|
|
| 7.
OBLIGATIONS UNDER FINANCE LEASE |
|
| The
rate of interest used as the discounting factor (i.e. implicit in the lease)
is 25% per annum. The amount |
|
| of
future payments and the periods during which they will fall due are: |
|
|
|
1998 |
1997 |
|
|
Rupees |
Rupees |
|
|
| Year
ending June 30, |
|
| 1999 |
|
160,680 |
- |
|
| 2000 |
|
160,680 |
- |
|
| 2001 |
|
51,590 |
- |
|
|
---------- |
---------- |
|
|
372,950 |
- |
|
| Less:
Future finance charges |
67,460 |
- |
|
|
---------- |
---------- |
|
|
305,490 |
- |
|
| Less:
Current maturity |
|
112,109 |
- |
|
|
---------- |
---------- |
|
|
193,381 |
- |
|
|
========= |
========= |
|
|
|
|
| The
lease rentals are payable in monthly instalments. The amount of lease rental
payable in 2001 include |
|
| the
amount of salvage value of Rs.38,200 adjustable at option to obtain ownership
of the leased asset. |
|
| There
is no financial restriction in the lease agreement. |
|
|
|
|
|
1998 |
1997 |
|
|
|
Rupees |
Rupees |
|
| 8.
MARGINAL DEPOSITS ON LEASE ARRANGEMENTS |
|
|
|
|
|
| Margin
deposits on lease arrangements |
|
53,243,680 |
68,446,572 |
|
| Less:
Current maturity |
|
|
19,984,764 |
20,794,920 |
|
|
|
--------- |
--------- |
|
|
|
33,258,916 |
47,651,652 |
|
|
|
========= |
========= |
|
|
|
|
| These
represent interest free security deposits received against lease contracts
and are |
|
| adjustable/repayable
at the expiry of their respective lease periods. |
|
|
| 9.
CUSTOMERS' DEPOSITS - Cols |
|
|
| Certificates
of investment (Note: 9.1) |
|
575,000 |
2,725,000 |
|
| Less:
Current maturity (Note: 11) |
|
|
- |
(1,000,000) |
|
|
|
---------- |
---------- |
|
|
|
575,000 |
1,725,000 |
|
|
|
========= |
========= |
|
|
|
|
|
| 9.1
These represent deposits accepted by the company from other companies and
individuals in |
|
| accordance
with the permission to issue registered certificates of deposit granted by
the Corporate |
|
| Law
Authority. |
|
|
| These
are for the period ranging from two years to three years and the return on
these deposits |
|
| range
from 17% to 18% p.a. |
|
|
| 10.
SHORT TERM LOANS - SECURED |
|
|
| Saudi
Pak Industrial & Agricultural |
|
| Investment
Co. (Pvt.) Ltd. |
|
| Loan No. 1 |
|
|
- |
10,000,000 |
|
| Loan No. 2 |
|
|
- |
5,000,000 |
|
|
|
--------- |
--------- |
|
|
|
- |
15,000,000 |
|
|
|
========= |
========= |
|
| 11.
SHORT TERM CUSTOMER DEPOSITS - Cols |
|
|
|
|
|
| Local
currency |
|
|
- |
900,000 |
|
| Foreign
currency (US $ 20,000) |
|
|
- |
802,400 |
|
|
|
--------- |
--------- |
|
|
|
- |
1,702,400 |
|
| Current
portion of long term certificate |
|
|
|
| of
investment (Note: 9) |
|
|
- |
1,000,000 |
|
|
|
--------- |
--------- |
|
|
|
- |
2,7O2,400 |
|
|
|
========= |
========= |
|
|
| 12.
CONTINGENCIES AND COMMITMENTS |
|
| Nil |
|
|
|
| 13.
TANGIBLE FIXED ASSETS |
|
| These
are for company's own use:- |
|
|
---------------------------------------------------------------------------------- |
|
|
C O S T |
|
Accumulated |
|
DEPRECIATION |
|
|
To |
|
To |
Depreciation |
Book Value |
--------------- |
|
|
July 01, |
Additions/ |
June 30, |
June 30, |
As at June 30, |
Charge for |
Rate |
|
|
1997 |
(Deletions) |
1998 |
1998 |
1998 |
the year |
% |
|
|
---------------------------------------------------------------------------------- |
|
|
(R u p e es) |
|
|
|
|
|
|
| Building- freehold |
|
2,430,520 |
- |
2,430,520 |
789,919 |
1,640,601 |
121,526 |
5 |
|
| Leasehold
improvements |
|
689,651 |
- |
362,915 |
626,133 |
63,516 |
54,438 |
15 |
|
|
(326,736) |
|
'(326,734) |
|
| Airconditioning
plant |
|
| and electric installations |
827,330 |
442,970 |
804,570 |
824,188 |
446,109 |
120,686 |
15 |
|
|
(465,730) |
|
'(465,727) |
|
| Furniture and fixtures |
779,344 |
231,135 |
852,723 |
566,185 |
413,300 |
69,844 |
10 |
|
|
(157,756) |
|
(126,762) |
|
| Office
machines and |
|
| equipment |
|
2,156,973 |
843,361 |
2,830,334 |
1,491,141 |
1,509,192 |
374,487 |
15 |
|
|
(170,000) |
|
(169,999) |
|
| Vehicles |
|
4,268,135 |
347,496 |
2,778,794 |
2,941,142 |
1,576,971 |
555,758 |
20 |
|
|
(1,836,837) |
|
(1,739,319) |
|
|
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
|
|
|
11,151,953 |
1,864,962 |
10,059,856 |
7,238,708 |
5,649,689 |
1,296,739 |
|
|
|
|
(2,957,059) |
|
(2,828,541) |
|
|
| Assets
subject to finance lease |
|
|
|
|
- |
406,268 |
406,268 |
81,254 |
325,014 |
81,254 |
|
|
|
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
|
|
|
11,151,953 |
2,271,230 |
10,466,124 |
7,319,962 |
5,974,703 |
1,377,993 |
|
|
(2,957,059) |
'(2,828,541) |
|
|
========= |
========= |
========= |
========= |
========= |
========= |
|
|
9,611,908 |
1,991,580 |
11,151,953 |
6,341,976 |
5,209,982 |
1,225,502 |
|
| 1997 |
|
(451,535) |
|
(400,005) |
|
| |
|
========= |
========= |
========= |
========= |
========= |
========= |
|
|
| 13.1 Detail of fixed assets sold during the
year |
|
|
|
| ----------------------------------------------------------------------------------------------------------------------- |
|
|
|
Accumulated |
Book |
Sale |
Profit/ |
Mode |
|
|
| Particulars |
Cost |
Depreciation |
Value |
Proceeds |
(Loss) |
of
sale |
Particulars of purchaser |
| ----------------------------------------------------------------------------------------------------------------------- |
|
| Motor
Vehicle |
|
| Suzuki Mehran |
253,518 |
177,464 |
76,054 |
175,000 |
98,946 |
Tender |
Mr. Waqar Ahmed, |
|
|
50-H, Model Town, |
|
|
Lahore. |
|
| Suzuki Mehran |
173,931 |
173,930 |
1 |
146,786 |
146,785 |
Tender |
Mr. Nusrat Iqbal, |
|
|
House No.513/4, |
|
|
Liaqatabad, |
|
|
Karachi. |
|
| Suzuki Mehran |
214,605 |
193,144 |
21,461 |
163,209 |
141,748 |
Tender |
Mr. Saqib Waseem, |
|
|
73-B, Ferozepur Road, |
|
Lahore. |
|
| Nissan Sunny |
623,083 |
623,082 |
1 |
309,000 |
308,999 |
Tender |
Syed Hassan All Naqvi, |
|
42-A, Allama Iqbal Town, |
|
Karachi. |
|
| Toyota Corrolla |
571,700 |
571,699 |
1 |
361,000 |
360,999 |
Tender |
Mr. Talat Rashid Butt |
|
250-P, Model Town, |
|
| Fixed Assets |
|
Lahore. |
|
| Office assets |
950,222 |
919,223 |
30,999 |
300,000 |
269,001 |
Negotiation |
Mr. M. Ilyas, |
|
|
85-B, Jail Road, Lahore. |
| Photocopy Machine |
170,000 |
169,999 |
1 |
71,600 |
71,599 |
Negotiation |
Gestetner (Pvt.) Ltd. |
|
--------- |
--------- |
--------- |
--------- |
--------- |
|
The Mall, Lahore. |
|
|
2,957,059 |
2,828,541 |
128,518 |
1,526,595 |
1,398,077 |
|
|
|
========== |
========== |
========== |
========== |
========== |
|
|
|
|
|
|
1998 |
1997 |
|
|
Rupees |
Rupees |
|
| 14.
LONG TERM INVESTMENTS |
|
|
| Government
securities |
|
| Federal
Investment Bonds (Note: 14.1) |
|
7,800,000 |
7,800,000 |
|
| Listed
companies |
|
|
| Muslim
Commercial Bank Ltd. |
|
588,000 |
588,000 |
|
| 14,160
(1997: 14,160) ordinary shares of |
|
| Rs.
10/- each. Market value Rs. 18.60 |
|
| (1997:
Rs. 32.75)per share (Note: 14.2) |
|
|
| Lease
Pak Limited |
|
500,000 |
500,000 |
|
| 50,000
(1997: 50,000) ordinary shares of Rs. 10/- each. |
|
| Market
value Rs.4.50 (1997: Rs. 5.15) per share |
|
|
| Less:
Provision for diminution in market value |
|
(275,000) |
- |
|
|
---------- |
---------- |
|
|
225,000 |
500,000 |
|
| Prudential
Discount and Guarantee House Limited |
|
4,000 |
- |
|
| 2,000
ordinary shares of Rs. 10/- each. |
|
| Market
value Rs. 2.00 per share |
|
|
---------- |
---------- |
|
|
8,617,000 |
8,888,000 |
|
|
========= |
========= |
|
|
|
|
| 14.1
These investments have been made to comply with SBP's Rules of Business (
Prudential |
|
| Regulations
) for Non-Banking Financial Institutions. FIBs have face value of Rs.
7,800,000 (1997: |
|
| Rs.
7,800,000) and maturity period range from three to ten years. The mark-up
receivable is 15% |
|
| per annum. |
|
|
| 14.2
No provision has been made for the diminution in value amounting to Rs.
324,624 (1997: |
|
| Rs.
124,260) as it is considered temporary in the context of the company's
intention to hold this |
|
| investment
on a long term basis. |
|
|
| 15.
DEFERRED COSTS |
|
|
Loan |
|
|
|
negotiation |
Share issue |
Total |
Total |
|
|
expenses |
expenses |
1998 |
1997 |
|
|
---------- |
---------- |
---------- |
---------- |
|
|
Rupees |
Rupees |
Rupees |
Rupees |
|
|
| Opening
balance |
|
1,582,467 |
151,321 |
1,733,788 |
2,183,864 |
|
| Add'
Incurred during the year |
1,522,917 |
- |
1,522,917 |
548,328 |
|
| Less:
Amortised during the year |
(1,112,438) |
(74,729) |
(1,187,167) |
(998,405) |
|
|
---------- |
---------- |
---------- |
---------- |
|
|
1,992,946 |
76,592 |
2,069,538 |
1,733,787 |
|
|
========== |
========== |
========== |
========== |
|
|
|
|
1998 |
1997 |
|
| 16.
SHORT TERM FINANCE - SECURED |
|
|
Rupees |
Rupees |
|
|
|
|
|
|
| Short
term morabaha finances |
|
|
207,335 |
918,763 |
|
| Current
portion of long term morabaha |
|
|
| finances-
overdue |
|
|
2,266,573 |
14,503,217 |
|
|
|
---------- |
---------- |
|
|
|
2,473,908 |
15,421,980 |
|
| Less:
Provision for doubtful finance |
|
|
207,335 |
219,834 |
|
|
|
---------- |
---------- |
|
|
|
2,266,573 |
15,202,146 |
|
| Add:
Advances against lease finance |
|
|
- |
2,124,394 |
|
|
|
---------- |
---------- |
|
|
|
2,266,573 |
17,326,540 |
|
|
|
========== |
========== |
|
|
|
|
| These
have been provided under morabaha agreements with aggregate resale price of
Rs.230,145 (1997: |
|
| Rs.
2,442,335) repayable within one year. These are secured by demand promissory
notes and personal |
|
| guarantees
of the directors of the respective Ioanee companies. |
|
|
| 17.
OTHER INVESTMENTS |
|
|
| These
represent short term placements under resale (Reverse Repo) arrangements with
other NBFIs |
|
| secured
against Government securities. |
|
|
|
|
1998 |
1997 |
|
|
|
Rupees |
Rupees |
|
| 18.
ADVANCES, DEPOSITS, PREPAYMENTS |
|
|
|
| AND
OTHER RECEIVABLES |
|
|
|
|
|
|
| Advances
to employees |
|
|
194,079 |
510,158 |
|
| Exchange
rate difference recoverable from |
|
|
|
| State
Bank of Pakistan |
|
|
273,909 |
273,909 |
|
| Deposits |
|
|
199,900 |
14,675 |
|
| Prepayments |
|
|
539,580 |
158,920 |
|
| Accrued
income (Note: 18.1) |
|
|
2,802,966 |
2,990,692 |
|
| Advance
income tax paid |
|
|
11,056,886 |
6,700,446 |
|
| Advance
Corporate Assets Tax |
|
|
1,638,667 |
- |
|
| Other
receivables |
|
|
1,512,615 |
3,699,139 |
|
|
|
---------- |
---------- |
|
|
|
18,218,602 |
14,347,939 |
|
|
|
========= |
========= |
|
|
|
|
| 18.1
Accrued income |
|
|
|
|
| Long
term investment |
|
|
434,959 |
456,530 |
|
| Bank
deposits |
|
|
425,382 |
496,049 |
|
| On
lease operation |
|
|
22,787,824 |
11,876,387 |
|
| On
morabaha finances and advances |
|
|
35,828 |
264,161 |
|
|
|
---------- |
---------- |
|
|
|
23,683,993 |
13,093,127 |
|
|
|
|
|
| Less:
Provision against doubtful income |
|
|
| Lease
operations |
|
|
20,845,199 |
10,102,435 |
|
| Morabaha
finance |
|
|
35,828 |
- |
|
|
|
---------- |
---------- |
|
|
|
20,881,027 |
10,102,435 |
|
|
|
---------- |
---------- |
|
|
|
2,802,966 |
2,990,692 |
|
|
|
========= |
========= |
|
| 19.
CASH AND BANK BALANCES |
|
| On
deposit accounts |
|
|
33,417,295 |
15,834,705 |
|
| On
current accounts (Note: 19.1) |
|
|
1,000,405 |
3,409,060 |
|
| Cash
in hand |
|
|
86,150 |
53,330 |
|
|
|
---------- |
---------- |
|
|
|
34,503,850 |
19,297,095 |
|
|
|
========= |
========= |
|
|
| 19.1
It includes an interest free deposit of Rs. 509,913 (1997 'Rs. 509,950)
maintained with State Bank |
|
| of
Pakistan under Rule 6 of SBP's Rules of Business (Prudential Regulations) for
Non-Banking |
|
| Financial
Institutions. |
|
|
| 20.
INCOME FROM LEASE OPAATIONS |
|
| Mark-up
on lease operations |
|
|
48,107,997 |
71,030,724 |
|
| Front
end fee |
|
|
162,073 |
833,887 |
|
| Commitment
fee |
|
|
14,107 |
153,743 |
|
|
|
---------- |
---------- |
|
|
|
48,284,177 |
72,018,354 |
|
|
|
========== |
========== |
|
| MARK-UP
INCOME |
|
|
|
| Federal
Investment Bonds |
|
|
1,170,582 |
953,506 |
|
| Banks
deposits |
|
|
3,812,814 |
3,783,734 |
|
| Morabaha
finance |
|
|
2,371,894 |
3,909,544 |
|
| Advance
against leases |
|
|
62,916 |
56,812 |
|
| Dividend
income |
|
|
50,000 |
- |
|
|
|
--------- |
--------- |
|
|
|
7,468,206 |
8,703,596 |
|
|
|
========== |
========== |
|
|
| 22.
OTHER INCOME |
|
|
|
| Miscellaneous and
Documentation charges |
|
| recovered |
|
|
357,187 |
628,058 |
|
| Profit
on sale of fixed assets (Note 13.1) |
|
1,398,077 |
259,852 |
|
|
|
--------- |
--------- |
|
|
|
1,755,264 |
887,910 |
|
|
|
========== |
========== |
|
| 23.
DIRECT COST OF LEASES |
|
|
|
|
|
|
|
|
|
| Lease
executory expenses |
|
|
27,431 |
54,397 |
|
| Insurance
expenses- Leased vehicles |
|
|
- |
25,155 |
|
|
|
--------- |
--------- |
|
|
|
27,431 |
79,552 |
|
|
|
========== |
========== |
|
| 24.
FINANCIAL CHARGES |
|
|
|
| Mark-up
on long term secured loans |
|
|
21,690,345 |
32,427,143 |
|
| Mark-up
on short term secured loans |
|
|
2,841,233 |
1,879,250 |
|
| Mark-up
on certificates of investment |
|
288,368 |
2,731,159 |
|
| Foreign
exchange risk coverage fee |
|
|
4,995,573 |
7,845,575 |
|
| Excise
duty on loan |
|
|
- |
68,034 |
|
| Exchange
loss |
|
|
306,165 |
345,410 |
|
| Others |
|
|
147,395 |
- |
|
|
|
--------- |
--------- |
|
|
|
30,269,079 |
45,296,571 |
|
|
|
========= |
========= |
|
|
|
|
| 25.
ADMINISTRATIVE AND OPERATING EXPENSES |
|
|
|
| Salaries
and benefits |
|
|
5,881,336 |
6,982,483 |
|
| Rent |
|
|
528,621 |
359,890 |
|
| Utilities |
|
|
329 821 |
364,928 |
|
| Stationery
and supplies |
|
|
353 558 |
474,577 |
|
| Repairs
and maintenance |
|
|
895 471 |
740,400 |
|
| Insurance |
|
|
295 856 |
257,832 |
|
| Telephone,
telex and postage |
|
|
610 862 |
815,502 |
|
| Travelling |
|
|
377 251 |
219,032 |
|
| Boarding
and lodging |
|
|
124 147 |
133,795 |
|
| Legal
and professional charges |
|
|
691 223 |
370,988 |
|
| Advertisement |
|
|
328 163 |
158,000 |
|
| Auditors'
remuneration (Note: 25.1) |
|
|
217 270 |
146,000 |
|
| Donations
(Note: 25.2) |
|
|
500 |
18,800 |
|
| Corporate
expenses |
|
|
168,992 |
199,451 |
|
| Zakat |
|
|
6,093 |
1,778 |
|
| Other
expenses |
|
|
996,451 |
1,016,452 |
|
| Credit
rating fee |
|
|
- |
134,417 |
|
| Penalty
levied by State Bank of Pakistan |
|
- |
1,150 |
|
|
|
--------- |
--------- |
|
|
|
11,805,615 |
12,395,475 |
|
|
|
========= |
========= |
|
|
| 25.1
Auditors Remuneration |
|
|
|
|
| Audit fee |
|
|
65,000 |
60,500 |
|
| Tax
and other consultancy |
|
|
127,500 |
- |
|
| Special
audits |
|
|
|
71,500 |
|
| Miscellaneous
certification |
|
|
10,000 |
- |
|
| Expenses
reimbursed |
|
|
14,770 |
14,000 |
|
|
|
--------- |
--------- |
|
|
|
217,270 |
146,000 |
|
|
|
========= |
========= |
|
|
|
|
| 25.2
None of the directors or their spouses had any interest in any of the donees. |
|
|
| 26.
TAXATION |
|
|
| Current |
|
| For
the year |
|
|
19,000,000 |
19,500,000 |
|
| Corporate
Assets Tax (Note: 26.2) |
|
|
2,610,667 |
- |
|
|
|
--------- |
--------- |
|
|
|
21,610,667 |
19,500,000 |
|
| Deferred |
|
|
22,900,000 |
- |
|
|
|
--------- |
--------- |
|
|
|
44,510,667 |
19,500,000 |
|
|
|
========= |
========= |
|
|
|
|
|
| 26.1
Tax provision is based on taxable profits as adjusted for tax purposes after
taking into account |
|
| available
rebates and credits. |
|
|
| 26.2
Provision for Corporate Assets Tax includes Additional Tax and Penalty
aggregating Rs. 1,610,667 |
|
| levied
for alleged late payment of the tax and filing of return. The company does
not accept that it |
|
| is
subject to this tax and is contesting the levies in appeals. |
|
|
| 26.3
Deferred taxation arising due to timing differences computed under the
liability method is estimated |
|
| at
Rs. 22.90 million out of which Rs. 8.71 million debit is in respect of the
current year (1997: |
|
| Rs.
34.55 million, for the year 14.47 million debit). Therefore a full provision
has been made there |
|
| against. |
|
|
| 27.
REMUNERATION OF CHIEF EXCUTIVE, DIRECTORS AND EXECUTIVES |
|
|
|
|
|
Chief Executive |
Executives |
|
|
------------------------------------------ |
|
|
1998 |
1997 |
1998 |
1997 |
|
|
------------------------------------------ |
|
|
Rupees |
Rupees |
Rupees |
Rupees |
|
|
------------------------------------------ |
|
| Managerial
remuneration |
760,000 |
623,053 |
298,764 |
453,700 |
|
| Bonus |
|
120,000 |
45,000 |
- |
37,600 |
|
| Accommodation |
342,000 |
246,043 |
193,889 |
317,590 |
|
| Utilities |
|
90,000 |
160,935 |
25,726 |
93,588 |
|
| Medical
expenses |
60,022 |
31,714 |
120,650 |
71,667 |
|
| Club
subscription |
13,493 |
7,002 |
- |
5,416 |
|
| Residential
telephone |
|
| Bills
reimbursed |
34,942 |
30,250 |
6,000 |
20,258 |
|
|
---------- |
---------- |
---------- |
---------- |
|
|
1,420,457 |
1,143,997 |
645,029 |
999,819 |
|
|
========= |
========= |
========= |
========= |
|
|
1 |
1 |
3 |
2 |
|
|
========= |
========= |
========= |
========= |
|
|
|
|
| The
Chief Executive and 2 Executives are provided with Company owned and
maintained cars. |
|
|
| Fees
paid to 5 non-executive Directors for attending meetings during the year Rs.
40,500 (1997:5 Directors; |
|
| fee
paid Rs. 40,500). |
|
|
| 28.
LEASES AND ADVANCES IN EXCESS OF 20% OF |
|
| PAID-UP
CAPITAL AND F~REE RESERVES |
|
|
| Following
are the parties to whom net investment in lease finance exceeded 20% (i.e.
Rs.15,002,610) of the |
|
| paid-up
capital and free reserves of the company: |
|
|
|
1998 |
1997 |
|
|
Rupees |
Rupees |
|
| Group name |
|
| Chakwal
group |
|
25,798,156 |
29,451,242 |
|
|
|
|
| 29. GENERAL |
|
|
| --
Previous period figures have been re-arranged wherever necessary for the
purposes of |
|
| comparison. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
