| Atlas Lease Limited |
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| Annual
Report 1998 |
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| Mission
Statement |
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| Lead
the Industry by providing quality service |
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| to
customers, ensure continuous growth in |
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| the
shareholders' value and contribute towards |
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| the
economic development of the country through |
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| a
youthful goal oriented, well rewarded team. |
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| TABLE
OF CONTENTS |
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| Notice
of Meeting |
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| Corporate Data |
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| Directors' Report |
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| Chairman's
Review |
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| Pattern of Shareholding |
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| Financial Highlights |
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| Graphic
Presentation |
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| Auditors'
Report |
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| Balance Sheet |
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| Profit and Loss Account |
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| Cash
Flow Statement |
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| Notes
to the Accounts |
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| Atlas
Group Companies |
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| NOTICE
OF MEETING |
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| Notice
is hereby given that the Eleventh Annual General Meeting of the members of
ATLAS LEASE |
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| LIMITED
will be held on Monday the December 14, 1998 at 03.00 p.m. at Registered
Office of the |
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| Company
at Federation House, Shame Firdousi, Clifton, Karachi to transact the
following business: |
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| ORDINARY
BUSINESS: |
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| 1.
To confirm the Minutes of the Tenth Annual General Meeting held on November
20, 1997 |
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| and
Extra Ordinary General Meeting held on December 24, 1997. |
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| 2.
To receive, consider and adopt the Audited Accounts of the Company for the
year ended |
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| June
30, 1998 together with the Directors' and Auditors' Report thereon. |
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| 3.
To approve the payment of Cash Dividend to the shareholders at the rate of
Rs. 1.50 per |
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| share
of Rs. 10/- each for the year ended June 30, 1998 as recommended by the Board
of |
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| Directors. |
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| 4.
To appoint Auditors and fix their remuneration for the year ending June 30,
1999. The present |
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| Auditors
M/s. Ford, Rhodes, Robson, Morrow, Chartered Accountants, retire and being
eligible, |
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| offer
themselves for reappointment. |
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| SPECIAL
BUSINESS: |
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| 5.
To approve the remuneration of the Chief Executive of the Company as
recommended by |
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| the Board. |
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| OTHER
BUSINESS: |
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| 6.
To transact any other business as may be placed before the meeting with the
permission of |
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| the Chair. |
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| A
statement under section 160 (1) (b) of the Companies Ordinance, 1984
pertaining to the Special |
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| Business
referred to above is annexed to this Notice of Meeting. |
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By Order of the Board |
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|
MUHAMMAD RAFIQUE UMBER |
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| Karachi:
October 31, 1998 |
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|
Company Secretary |
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| NOTES: |
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| i)
The Register of Members of the Company will remain closed from 07/12/1998 to |
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| 14/12/1998
(both days inclusive). Transfers received in order at the Registered Office
of the |
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| Company
at the close of business on December 06, 1998 will be treated in time for the |
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| purpose
of entitlement of dividend. |
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| ii)
A member entitled to attend and vote at this meeting may appoint another
member as his / |
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| her
proxy to attend and vote on his / her behalf. The instrument appointing a
Proxy and the |
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| power
of attorney or other authority under which it is signed or a notarially
certified copy of |
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| the
power of authority must be received at the Registered Office of the Company
duly stamped, |
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| signed
and witnessed not later than 48 hours before the meeting. |
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| iii)
Members are requested to notify any change in their addresses immediately. |
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| STATEMENT
UNDER SECTION 160 (1) (b) OF THE COMPANIES ORDINANCE,1984 |
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| This
statement sets out the material facts concerning the Special Business to be
transacted at the |
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| Eleventh
Annual General Meeting of Atlas Lease Limited to be held on December 14,
1998. |
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| Approval
of the shareholders will be sought for the remuneration payable to the Chief
Executive of |
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| the
Company in accordance with the terms and conditions of his service, as
recommended by the |
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| Board
of Directors of the Company. For this purpose, it is intended to propose the
following Resolution |
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| to
be passed as an Ordinary Resolution. |
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| RESOLVED |
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| "that
the Company hereby authorises the holding of office of profit and payment as
remuneration |
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| (inclusive
of allowances) to the Chief Executive, not exceeding in the aggregate Rs. 2.5
million per |
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| annum
for the year ending June 30, 1999 in addition to perquisites and other
benefits to which he |
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| is
entitled as per Company policy". |
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| Mr.
Khaleeq-ur-Rahman Khan, Chief Executive of the Company is interested in the
business to the |
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| extent
of his remuneration. |
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| CORPORATE
DATA |
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| BOARD
OF DIRECTORS: |
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| CHAIRMAN |
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| Mr.
Yusuf H. Shirazi |
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| CHIEF
EXECUTIVE |
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| Mr.
Khaleeq-ur-Rahman Khan |
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| MEMBERS |
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| Mr.
Masanori Okuda |
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| Mr.
Muhammad Shafi |
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| Mr.
Razi-ur-Rahman Khan |
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| Mr.
Sanaullah Qureshi |
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| Mr.
Saquib H. Shirazi |
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| Mr.
Talat Mahmood |
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| Mr.
Toshiki Miyazaki |
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| COMPANY
SECRETARY: |
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| Mr.
Muhammad Rafique Umer |
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| GROUP
EXECUTIVE COMMITTEE: |
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| CHAIRMAN |
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| Mr.
Yusuf H. Shirazi |
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| MEMBERS |
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| Mr.
Jawaid Iqbal Ahmed |
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| Mr.
Frahim Ali Khan |
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| Mr.
Iftikhar H. Shirazi |
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| Mr.
Aamir H. Shirazi |
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| Mr.
Saquib H. Shirazi |
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| SECRETARY |
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| Mr.
Amjad Hussain |
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| GROUP
PERSONNEL COMMITTEE: |
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| CHAIRMAN |
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| Mr.
Yusuf H. Shirazi |
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| GROUP
AUDIT COMMITTEE: |
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| CHAIRMAN |
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| Mr.
Sanaullah Qureshi |
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| AUDITORS: |
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| Ford,
Rhodes, Robson, Morrow |
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| Chartered
Accountants |
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| LEGAL
ADVISORS: |
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| Mohsin
Tayebaly & Co. |
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| BANKERS
& LENDING INSTITUTIONS: |
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| BANKERS: |
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| ABN
AMRO Bank |
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| Allied
Bank of Pakistan Limited |
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| ANZ
Grindlays Bank plc |
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| Askari
Commercial Bank Limited |
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| Faysal
Bank Limited |
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| Habib
Bank AG Zurich |
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| Habib
Bank Limited |
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| Standard
Chartered Bank |
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| The
Bank of Tokyo-Mitsubishi, Limited |
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| The
Hongkong and Shanghai Banking Corporation |
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| LENDING
INSTITUTIONS: |
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| AI-Faysal
Investment Bank Ltd. |
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| Asian
Development Bank (ADB) |
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| Commonwealth
Development Corporation (CDC) |
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| First
International investment Bank Ltd. |
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| German
investment and Development Company (DEG) |
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| International
Finance Corporation (IFC) |
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| National
Discounting Services Ltd. |
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| Netherlands
Development Finance Company (FMO) |
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| Pakistan
Kuwait Investment Company (Pvt.) Ltd. |
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| REGISTERED
OFFICE & HEAD OFFICE: |
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| Federation
House, Sharae Firdousi, |
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| Clifton,
Karachi - 75600 |
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| Tel:
(92-21) 5866817 - 20, 5866919 - 20 Fax: 5870543 |
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| E-mail:
all@atlasgrouppk.com |
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| BRANCH
OFFICES: |
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| LAHORE
OFFICE: |
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| Ist
Floor, Emirates Bank Building, |
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| 14-
Egerton Road, Lahore |
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| Tel:
(92-42) 6366170 - 74,6364941 Fax: 6365058 |
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| ISLAMABAD OFFICE: |
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| 2nd Floor, Saudi Pak Tower, |
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| Blue
Area, Islamabad |
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| Tel:
(92-51) 824906, 824909 Fax: 821377 |
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| DIRECTORS'
REPORT |
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| The
Directors have pleasure in submitting Annual Report of the Company together
with the |
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| Audited
Accounts and the Auditors' Report thereon for the year ended June 30, 1998. |
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1998 |
1997 |
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|
Rupees |
Rupees |
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| Financial
Results: |
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| Net
profit for the year after charging all |
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| expenses
and doubtful debts |
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19,712,909 |
17,722,779 |
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| Previous
profit brought forward |
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4,213,954 |
35,731 |
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|
--------------- |
--------------- |
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| Profit
available for appropriation |
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23,926,863 |
17,758,510 |
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| Appropriations: |
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| Transfer
to statutory reserve |
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3,942,582 |
3,544,556 |
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| Transfer
to general reserve |
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4,000,000 |
10,000,000 |
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| Cash dividend |
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15,778,590 |
-- |
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--------------- |
--------------- |
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23,721,172 |
13,544,556 |
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|
--------------- |
--------------- |
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| Unappropriated
profit carried forward |
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205,691 |
4,213,954 |
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|
========== |
========== |
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| Dividend: |
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| The
Directors are pleased to recommend a cash dividend of 15%. |
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| Chairman's
Review: |
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| The
accompanying Chairman's Review deals with the performance of the Company
during the |
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| year
and future outlook. The Directors of the Company endorse the contents of the
review. |
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| Pattern
of Shareholding: |
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| The
pattern of shareholding of the Company is annexed. |
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| Auditors: |
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| The
present Auditors Messrs Ford, Rhodes, Robson, Morrow, Chartered Accountants,
retire and |
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| being
eligible, offer themselves for reappointment. |
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|
for and on behalf of |
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|
BOARD OF DIRECTORS |
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| SANAULLAH
QURESHI |
KHALEEQ-UR-RAHMAN KHAN |
YUSUF H. SHIRAZI |
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| Director |
|
Chief Executive |
|
Chairman |
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| Karachi:
October 31, 1998 |
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| CHAIRMAN'S
REVIEW |
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| I
have the pleasure to present the 11th Annual |
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| Report
of your Company for the year ended |
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| June30, 1998. |
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| THE
ECONOMY |
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| The
year under review was full of challenges |
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| on
both the domestic and international fronts. |
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| On
the domestic front, the country faced |
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| constitutional
issues of extraordinary nature |
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| which
affected the flow of normal economic |
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| activity.
On the international front, foreign |
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| investment
was affected - partly due to the |
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| internal
situation and mainly due to the |
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| economic
crisis affecting Latin American, |
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| Russian
and the South East Asian countries' |
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| economies
resulting into the shying away of |
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| investment
from the international capital |
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| markets. |
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| On
the other hand, Pakistan's economic |
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| performance
over the last few years has been |
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| marked
by a deceleration in economic activity, |
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| deterioration
in budgetary and current account |
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| deficits
and inflation. In order to reinvigorate |
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| economic
growth the Government took some |
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| measures.
It introduced economic reforms |
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| based
on both supply and demand side |
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| economics.
To improve revenue collection, |
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| general
sales tax regime was re-launched at |
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| the
retail level which partially increased the |
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| 'Tax
Net'. The effect of these policy measures |
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| will
however take time to yield the desired |
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| results. |
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| Towards
the year-end, Pakistan opted for |
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| nuclear
detonation on May 28, 1998 following |
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| India's
nuclear tests on May 11, 1998. It led to |
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| economic
sanctions by the developed countries. |
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| The
international loan giving agencies put their |
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| shutters
down. Consequently, foreign currency |
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| accounts
were frozen, rupee was devalued by |
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| 4.4%,
making it 14.1% for the full fiscal year |
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| and
a two-tier foreign exchange regime was |
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| introduced. |
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| Despite
the worsening situation, the economic |
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| indicators
for the year were quite satisfactory. |
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| The
GDP grew by 5.4% as against 1.3% last |
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| year.
Agricultural sector grew by 5.9% and the |
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| manufacturing
sector by 7.0%. The large- |
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| scale
manufacturing sector registered |
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| a
growth of 6.2%. The transport and |
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| communication
sector recorded a growth of |
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| 8.8%.
Fixed investment increased by 6.5% and |
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| national
savings increased to 15.0% of GNP |
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| from
the 11.3% of last year. |
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| MONETARY
DEVELOPMENTS |
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| The
year under review witnessed important |
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| changes
in the monetary system too. The State |
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| Bank
of Pakistan reduced statutory liquidity |
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| requirement
ratio and cash reserves and re- |
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| designed
the export refinance scheme which |
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| improved
liquidity in the money market. The |
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| demand
however remained low early during the |
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| year.
The surplus liquidity went into government |
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| securities.
The excess liquidity brought down |
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| Treasury
Bill rates to almost 12.0 percent. |
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| The
banking system witnessed important |
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| structural
reforms. The nationalized commercial |
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| banks
(NCBs) underwent a downsizing exercise |
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| and
their non-performing loans were prioritized |
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| for
recovery. The objective was to restructure |
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| these
banks before privatization. The State Bank |
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| of
Pakistan tightened the lending criteria. The |
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| defaulters
could no longer get bank credit. The |
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| SBP
introduced a more comprehensive set of |
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| disclosure
laws. A number of regulatory |
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| measures
were taken by the SBP to improve |
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| its
regulation and supervision mechanism to |
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| ensure
availability of adequate credit in the |
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| economy. |
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| ATLAS
GROUP PERFORMANCE |
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| The
Atlas Group of which your company is a |
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| constituent
member, jealously guards its brand |
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| equity
which represents good management |
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| practices,
ethical standards and quality of goods |
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| and
services provided to its customers. The |
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| Group
enjoys an excellent image in |
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| government,
business and social circles, both |
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| nationally
and internationally. |
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| The
Atlas Group is diversified and has |
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| operations
in engineering, financial services, |
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| trading
office equipment and information |
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| technology.
It consists of seven public limited |
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| companies
quoted on the stock exchanges in |
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| Pakistan
and eight private limited companies. |
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| Atlas
shareholders' equity has grown to about |
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| Rs.
2.5 billion over the years; assets have |
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| increased
to over Rs. 8 billion, and sales |
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|
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| revenue
crossed the Rs. 8 billion mark. The |
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| Group
paid taxes of Rs. 2.2 billion being 27.5% |
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| of
the total turnover of the Group. More than |
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| 50%
of employees numbering 2,700 pay taxes |
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| on
their income and wealth. |
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| The
total paid up capital of the seven listed |
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| companies
stood at Rs. 944 million and free |
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|
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| reserves
and surplus at Rs. 1.11 billion. The total |
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| equity
of listed companies stood at Rs. 2.05 |
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|
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| billion
as at June 30, 1998. The net worth value |
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| of
a Rs. 10 share works out at Rs. 21.77. Out of |
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|
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| these
seven companies, two companies have |
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|
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| been
rated 'A+' and three 'A' by the credit rating |
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| and
other evaluating agencies. |
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| The
seven listed companies, set up at different |
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| times
- the earliest in 1963 with a paid up capital |
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| of
Rs. 2.0 million and the latest in 1993 with a |
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|
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| paid
up capital of Rs. 400.00 million- have paid |
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| cash
dividend of Rs. 287 million and bonus of |
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|
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| Rs.
208 million (market value Rs. 435 million). |
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| Your
Company was set up in 1989 with a paid |
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| up
capital of Rs. 20.00 million which has grown |
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| to
Rs. 105.19 million. The total equity at Rs. |
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| 217.70
million includes reserves and the un- |
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| appropriated
profit of Rs. 112.51 million. During |
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| this
period the Company issued bonus shares |
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| of
Rs. 16.55 million (market value Rs. 48.82 |
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| million
at Rs. 29.50 per share) and paid cash |
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| dividend
of Rs. 54.76 million. |
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|
|
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| HUMAN
RESOURCES |
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| Reliance
on Human Resource has been the hall |
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| mark
of Atlas Group since its inception. |
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| Investment
on Human Resource Development |
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| is
considered a prudent investment for all times |
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| to
come. Education, training and grooming of |
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| employees
for higher positions is a normal |
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| feature
with the Group. |
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| To
cope up with the growing needs of the Group, |
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| a
permanent cell has been established at the |
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| Corporate
Office for Human Resource |
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| Development.
A full time Director assists the |
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| Group
Personnel Committee which is headed |
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| by
the Group President and Chairman. The |
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| Committee
actively works for improving staff |
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| service
rules, staff compensation, and career |
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| planning
to make them more competitive and |
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| attractive
for the employees. Compensation |
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| based
on Job evaluation and performance |
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| appraisal
is now all the more a determining |
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| factor
for the performance bonus and the |
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| employees
motivation. |
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|
|
|
| THE
LEASING INDUSTRY |
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| The
leasing industry, which started in Pakistan |
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| in
1984 has had a growth rate of approximately |
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| 35%
p.a. over the last five years. It has |
|
| contributed
to the extent of approx. 8% of private |
|
| fixed
capital formation in the country. At present, |
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| there
are 32 leasing companies with a total |
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| equity
of Rs. 8.0 billion. Total outstanding lease |
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| portfolio
amounts to Rs. 36 billion. Market |
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| penetration
has been low mainly due to non- |
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| availability
Of long-term funds, high cost of |
|
| money
and the willful default culture. As |
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| suggested
in earlier reviews, the risk of default |
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| can
be reduced if post-dated cheques for the |
|
| entire
lease period from the lessees are made |
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| mandatory
and the law of bouncing of cheques |
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|
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| which
already exists is implemented in letter and |
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|
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| spirit. |
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| On
the other hand, it is encouraging that the |
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|
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| Government
has resolved a number of pending |
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|
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| issues
favorably. These include treatment of |
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|
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| residual
value of leased assets as purchase |
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|
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| price
for lessees, avoiding double tax deduction |
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| on
sale and lease back transactions and |
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|
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| withdrawal
of Capital Value Tax on used |
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| vehicles.
In a package for the engineering |
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|
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| sector,
the Government had announced |
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|
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| increase
in the upper limit of the value of cars |
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| for
claiming depreciation allowance from Rs. |
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| 0.6m
to Rs. 1.0m which has not yet been |
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|
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| implemented:
Sooner the implementation, the |
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|
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| better! |
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| THE
COMPANY'S RESULTS |
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| During
the year under review Lease |
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|
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| Disbursement
of Rs. 544.41m was made, which |
|
|
|
| was
92.74% of the last year. Net Investment in |
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|
|
| Lease
Finance as on June 30, 1998 amounted |
|
|
|
| to
Rs. 1,874.10m. The lease portfolio during |
|
|
|
| the
year comprised of 52.60% in Machinery, |
|
|
|
| 37.78%
in Vehicles and 9.62% in Office |
|
|
|
| Equipment.
The sectoral exposure as on June |
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|
|
| 30,
1998, was fairly diversified and comprised |
|
|
|
| of
14.63% in Textile followed by 13.94% in |
|
|
|
| Chemical
& Fertilizer, 9.27% in Services, 9.21% |
|
|
|
| in
Electrical & Electronic Goods, 8.53% in |
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|
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| Financial
Institutions, 8.28% in Steel & |
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|
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| Engineering,
6.54% in Cement and 6.50% in |
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|
|
| Food,
Tobacco & Beverages. |
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|
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|
|
| Gross
Revenue during the year amounted to |
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|
|
| Rs.
339.35m, up 4.51% from Rs. 324.71m of |
|
|
|
| the
last year. Financial charges amounted to |
|
|
|
| Rs.
263.15m, slightly higher than Rs. 262.34m |
|
|
|
| of
the last year. Administrative Expenses rose |
|
|
|
| by
14.33% to Rs. 34.55m from Rs. 30.22m. |
|
|
|
| Provision
for doubtful debts amounted to |
|
|
|
| Rs.
5.18m compared to Rs. 3.79m last year. |
|
|
|
| The
profit before tax for the year amounted to |
|
|
|
| Rs.
34.36m compared to Rs. 24.63m last year. |
|
|
|
|
|
|
|
|
| DEFERRED
TAX |
|
|
|
| The
revised International Accounting Standard |
|
|
|
| which
is effective from January 2001, requires |
|
|
|
| provision
to be made for deferred taxation, |
|
|
|
| irrespective
of its being reversible in foreseeable |
|
| future
or not. Although in your Company's case |
|
| the
deferred taxation liability is not likely to |
|
| reverse
in the foreseeable future, yet the Board |
|
| of
Directors has decided to start making a |
|
| provision.
A sum of Rs. 5.5 million has been |
|
| provided
in the year under review. |
|
|
|
|
| FUNDING |
|
|
| In
the absence of adequate long-term funds |
|
| through
local and international avenues the |
|
| company
managed its resource mobilization |
|
| through
COI portfolio and short-term funds from |
|
| the
local money market. In addition to the |
|
| resource
mobilization through COI and money |
|
| market
operations, the company raised medium |
|
| term
finance facilities of Rs. 73.10 million locally. |
|
|
|
|
