| English Leasing Limited |
|
|
|
|
|
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|
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|
| Annual
Report 1998 |
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|
| CONTENTS |
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|
| Company
Information |
|
| Notice
of Annual General Meeting |
|
| Chairman
Review |
|
| Director's
Report |
|
| Auditor's
Report |
|
| Balance
Sheet |
|
| Profit
& Loss Account |
|
| Statement
of Changes in Financial Position |
|
| Notes
to the Accounts |
|
| Pattern
of Shareholding |
|
|
|
| COMPANY
INFORMATION |
|
|
| Company
Secretary |
|
| Mr.
Azhar Hussain |
|
|
| Bankers |
|
| Allied
Bank of Pakistan Limited |
|
| Muslim
Commercial Bank Limited |
|
| The
Bank of Khyber |
|
| Prudential
Commercial Bank Ltd. |
|
|
| Auditors |
|
| Rahim
Iqbal Rafiq & Co. |
|
| Chartered
Accountants |
|
|
| Legal
Advisor |
|
| Mr.
Haq Nawaz Chattha |
|
| International
Legal Services |
|
|
| Registrars
& Share Transfer Office |
|
| C
& K Management Associates (PVT) Limited |
|
| 4th
Floor, Trade Tower, |
|
| Abdullah
Haroon Road, |
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| Near
Metropole Hotel, Karachi- 75530 |
|
|
| Registered
Office |
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| 801,8th
Floor, Fortune Centre, |
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| 45-A,
Block '6', P.E.C.H.S., |
|
| Shahrah-e-Faisal, |
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| Karachi. |
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| Tel:
4529061-64 (4 Lines) |
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| Fax: 4529065 |
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| Principal
Office |
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| M. K. Arcade |
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| 32
- Davis Road. |
|
| Lahore. |
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| Tel:
6303855-58, 6302803-4 |
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| Fax:
9242-6304251 |
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| E-mail:ell@pol.com.pk |
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|
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| NOTICE
OF ANNUAL GENERAL MEETING |
|
|
| Notice
is hereby given that Seventh Annual General Meeting of the shareholders of
English Leasing |
|
| Limited
will be held at its Registered Office 801,8th Floor, Fortune Centre
Shahrah-e-Faisal, Karachi |
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| on
Thursday December 31, 1998 at 10:30 a.m. to transact the following business. |
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|
| 1.
To confirm the minutes of the Sixth Annual General Meeting held on December
28, 1997. |
|
|
| 2.
To receive, consider and adopt the Audited Accounts of the Company for the
year ended June |
|
| 30,
1998, together with the Director's and Auditor's Report there on. |
|
|
| 3.
To approve the payment of Cash Dividend of Rs. 2.00 per share (20%) for the
year ended June |
|
| 30,
1998, as recommended by the Board of Directors. |
|
|
| 4.
To elect seven Directors fixed by the Board of Directors for a period of 3
years in accordance |
|
| with
section 178 of the Companies Ordinance 1984, in place of the following
retiring Directors |
|
| namely: |
|
|
| 1.
Sheikh Javaid Mahmood |
|
5. Mr. Muhammad Rashid
Zahir |
|
| 2.
Sheikh Manzoor Elahi |
|
6. Mr. M. Saad Maniar |
|
| 3.
Sheikh Irshad Ahmad |
|
7. Mrs. Taskeen Javaid |
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| 4.
Mr. Zahid Ali H. Jamall |
|
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| All
retiring Directors shall be eligible for re-election. |
|
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| 5.
To appoint Auditors for the year 1998-99 and fix their remuneration. The
present Auditors M/s. |
|
| Rahim
Iqbal Rafiq & Co., Chartered Accountants, retire and being eligible,
offer themselves for |
|
| re-appointment. |
|
|
| 06.
To transact any other business which may be placed before the meeting with
the permission of |
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| the chair. |
|
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| Karachi:
December 10, 1998 |
|
By Order of the Board |
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|
|
|
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|
|
|
(Azhar Hussain) |
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|
|
Company Secretary |
|
|
| Notes: |
|
|
| 1.
The Share Transfer Books of the Company will remain closed from December 24,
to December |
|
| 31,
1998/both days inclusive) |
|
|
| 2.
A member entitled to attend and vote at this meeting is entitled to appoint
another member as |
|
| his/her
proxy, in order to be effective, must be received at the Registered Office of
the Company |
|
| not
less than 48 hours before the time for holding the meeting. |
|
|
| 3.
Nominations from shareholders for the office of Directors must be received at
least 14 clear days |
|
| before
the time of Meeting at the Registered Office of the Company. |
|
|
| 4.
Members are required to notify the change of address, if any immediately. |
|
|
| 5.
As per CIA Notification of May, 1991 no gift will be given to the
shareholders. |
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| CHAIRMAN'S
REVIEW |
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| I
feel immense pleasure while |
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| presenting
7th Annual Accounts of |
|
| your
Company for the period ended |
|
| June
30, 1998, from which you will |
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| also
be happy to find that amidst |
|
| extremely
unfavourable business, |
|
| industrial
and economic atmosphere, |
|
| your
company has done exceeding |
|
| well
and produced best results in |
|
| every
area of its operations. |
|
|
| Review
of ELL Operations: |
|
|
| Although
poor economic conditions persisted in the country, the company has not only
maintained its |
|
| growth
but made good overall progress. The company made Gross Lease Disbursements of
Rs.106.435 |
|
| million
raising its total disbursement to Rs.575.765 million registering an increase
of 23% over the |
|
| previous
year figure of Rs. 469.330 million. Net investment in leases increased by 39%
from Rs. 109.393 |
|
| million
to Rs. 152.346 million in the year 1997. The Company generated income of Rs.
51.773 million |
|
| from
lease operations showing 14% increase over the previous year, earned pre-tax
profit of Rs. 22.330 |
|
| million,
thus recorded 49% increase over the previous year figure of Rs. 15.001
million. Expenditure |
|
| on
the other hand, reduced to Rs. 29.443 million form Rs. 30.245 million of last
year despite inflationary |
|
| conditions
which speaks of tight management controls. Main expenditure consist of
financial charges |
|
| Rs.
18.486 million which nominally increased by Rs. 0.320 million. Stock market
remained poor |
|
| throughout
the year and company investment both long term and short term depleted
further. |
|
|
| As
a matter of policy, your management maintained diversified lease portfolio
with highest exposure |
|
| in
Machinery 87%, Vehicles 11% and Equipment 2%. Sector-wise exposure reads
Textile Processing |
|
| 7%,
Textile Weaving 7%, Textile Spinning 3%, Engineering 11%. Sugar 19%,
Electronics 5%, Food & |
|
| Allied
2%, Paper & Board 2%, Agriculture 9%, Synthetic and Fibres 5%, Knitting
8%, Dyeing & Printing |
|
| 9%
and Miscellaneous 13%. |
|
|
| The
company continued its policy of accommodating small and medium enterprises
and have been |
|
| quite
selective in picking up customers of repute, creditability and financial
soundness apart from |
|
| evaluating
the intrinsic value of the assets to be leased. |
|
|
| Recoveries: |
|
| Contrary
to the general deteriorating trend in the leasing sector, |
|
| our
company has been able to further restrict infection portfolio |
|
| and
brought significant reduction. The company has demonstrated |
|
| effective
risk management with prudent credit evaluation and |
|
| regular
post disbursement monitoring. To mitigate the risk in the |
|
| present
adverse operating environment, policy of securing |
|
| additional
collateral from all its new clients has been adopted. |
|
| Inspire
of adverse market and economic conditions, the recovery |
|
| rate
improved slightly and remained at 91%. |
|
|
| Resource
Mobilization: |
|
| The
Company has continued its compaign for Long |
|
| Term
Financing from Banks and Financial Institutions |
|
| and
succeeded in getting fresh credit lines of Rs. 55.00 |
|
| million
for 3 years. Further, after having successfully |
|
| qualified
for ADB credit line under Financial Sector |
|
| Intermediation
Loan (FSIL), we have received first re- |
|
| imbursement
of Rs. 40.00 million equivalent to |
|
| US$873,255,
repayable in fifteen (15) years including |
|
| two
years grace period. Proposals for Long Term |
|
| Facilities
are also under active consideration of The |
|
| Bank
of Punjab, Pak-Libya and Allied Bank of Pakistan. |
|
| Four
more proposals of aggregate sum of Rs. 71.75 |
|
| million
(approx.) are also pending with ADB and we are |
|
| hopeful
of getting further substantial amount from them. |
|
| Thus
a vital break through has been achieved by the |
|
| Company
for its future development and progress. |
|
|
| With
respect to funds mobilization under COIs, although due to various deposit
schemes launched by |
|
| different
Banks and Financial Institutions procurement of funds under COIs has been
quite difficult, still |
|
| the
company has secured Long Term and Short Term deposit to the tune of Rs.
16.757 million. |
|
|
| Credit
Rating |
|
| In
recognition of the alround improvements in its performance and asset quality,
the Pakistan Credit |
|
| Rating
Agency (PACRA), while updating the Company's Credit Rating has upgraded Long
Term rating |
|
| from
BB (Double B) to BB+ (Double B Plus) while Short Term rating at B (Single B)
has been maintained, |
|
| which
is appreciable, under the present scenario. |
|
|
|
|
| Future
Outlook: |
|
| The
leasing sector may continue facing challenges like low economic activity,
scarcity of long term |
|
| funding,
reduced margin and mounting competition, delays and even defaults in rental
collection for |
|
| some
time in the future. Our Company is fully alive to the situation and shall
meet the challenges |
|
| squarely.
Further with the release of economic sanctions, relief provided in
electricity surcharge, |
|
| increased
GNP, package offered for revival of industrial sector and endeavours to
augment exports, |
|
| with
expected bumper cash crops like Cotton, Rice and Sugar cane, present adverse
conditions are |
|
| more
likely to improve the existing scenario to the advantage of the leasing
Sector bringing much |
|
| needed
relief to the country's economy to rejuvenate its business and industrial
activity. |
|
|
| Year
2000 Issue: |
|
| The
Company has addressed the year 2000 compliance issue in relation to the
computer hardware |
|
| and
software. Necessary steps have been taken to ensure that the hardware and
software can handle |
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| the
millennium bug. |
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|
|
|
| Acknowledgement: |
|
| I
express my thanks to the Ministry of Finance, Corporate Law Authority, State
Bank of Pakistan, Banks |
|
| and
Financial Institution, our Board of Directors, and customers for their
continued support and valuable |
|
| guidance
for promotion and progress of the Company. I also extend appreciation to my
colleagues and |
|
| all
the staff members for their dedicated services and hardwork which made the
above results possible, |
|
|
|
| DIRECTOR'S
REPORT |
|
|
| Your
Directors endorse the accompanying Chairman Review on the activities of the
Company |
|
| and
feel pleasure in presenting the 7th Annual Report together with the Audited
Accounts |
|
| of
the Company for the period ended June 30, 1998. |
|
|
| Financial
Highlights of the Company are as follows: |
|
|
| Financial
Highlights: |
|
Rupees |
|
| Profit
after tax |
|
20,793,801 |
|
| Unappropriated
profit brought forward |
|
366,629 |
|
| Profit
available for appropriation |
|
21,160,430 |
|
| Appropriations |
|
|
| Transfer
to Statutory Reserve |
|
|
4,158,760 |
|
| Transfer
to General Reserve |
|
|
- |
|
| Transfer
to Contingencies Reserve |
|
|
96,523 |
|
| Proposed
dividend @ 20% |
|
|
|
16,000,000 |
|
|
|
|
|
|
---------- |
|
|
|
|
|
|
20,255,283 |
|
|
|
|
|
|
---------- |
|
| Unappropriated
Profit Carried Forward |
|
905,147 |
|
|
|
|
|
|
========== |
|
|
| Auditors: |
|
| The
present auditors, M/s Rahim Iqbal Rafiq and Company, Chartered Accountants,
retire |
|
| and
being eligible offer themselves for reappointment. |
|
|
| Pattern
of Shareholding: |
|
| Pattern
of shareholding is annexed. |
|
|
|
|
For and on behalf of the Board |
|
|
|
|
|
|
|
|
|
Sheikh Manzoor Elahi |
|
| Dated:
December 10, 1998 |
|
Chief Executive |
|
|
|
| AUDITOR'S
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed Balance Sheet of English Leasing Limited as at June
30,1998 |
|
| and
the related Profit and Loss Account and Statement of Changes in Financial
Position together |
|
| with
the notes forming part thereof, for the year then ended and we state that we
have obtained |
|
| all
the information and explanations which to the best of our knowledge and
belief were necessary |
|
| for
the purposes of our audit and, after due verification thereof, we report
that: |
|
|
| (a)
in our opinion, proper books of account have been kept by the Company as
required by |
|
| the
Companies ordinance, 1984; |
|
|
|
|
| (b)
in our opinion: |
|
|
|
|
| (i)
the balance Sheet and Profit and Loss Account together with the notes thereon |
|
| have
been drawn up in conformity with the Companies Ordinance, 1984, and are |
|
| in
agreement with the books of account and are further in accordance with the |
|
| accounting
policies consistently applied; |
|
|
| (ii)
the expenditure incurred during the year was for the purpose of the company's |
|
| business;
and |
|
|
| (iii)
the business conducted, investments made and 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 and Profit and Loss Account and the Statement of
Changes |
|
| in
Financial Position, together with the notes forming part thereof, give the
information |
|
| required
by the Companies Ordinance, 1984 in the manner so required and respectively |
|
| give
a true and fair view of the state of the Company's affairs as at June 30,
1998; and |
|
| of
the profit and the changes in Financial Position for the year then ended; and |
|
|
| (d)
in our opinion, no Zakat was deductible at source under the Zakat and Ushr
Ordinance, |
|
| 1980. |
|
|
|
| (e)
Without qualifying our opinion, we draw attention to Note 13.2 whereby long
term |
|
| investment
are carried at cost and no provision has been made for the decline by Rs. |
|
| 16.609
million market value of these investments. |
|
|
| Karachi: |
|
|
Rahim Iqbal Rafiq & Co |
|
| Dated:
December 02, 1998 |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 1998 |
|
|
|
|
1998 |
1997 |
|
|
Note |
Rupees |
Rupees |
|
|
|
|
| SHARE
CAPITAL AND RESERVES |
|
|
|
|
|
| Authorised |
|
|
|
| 50,000,000
Ordinary shares of Rs.10 each |
|
500,000,000 |
500,000,000 |
|
|
|
|
========== |
========== |
|
| Issued,
subscribed and paid up |
|
|
| 8,000,000
Ordinary shares of |
|
|
| Rs.10
each fully paid in cash |
|
|
80,000,000 |
80,000,000 |
|
| Capital
reserves |
|
3 |
18,029,277 |
13,870,517 |
|
| Revenue
reserves |
|
4 |
26,980,260 |
26,883,737 |
|
| Unappropriated
profit |
|
|
905,147 |
366,629 |
|
|
|
|
---------- |
---------- |
|
|
|
|
125,914,684 |
21,120,883 |
|
|
|
|
|
|
| LONG
TERM LOANS |
|
5 |
41,927,005 |
19,036,259 |
|
| OBLIGATIONS
UNDER FINANCE LEASE |
|
6 |
2,890,903 |
889,495 |
|
| LONG
TERM DEPOSITS |
|
7 |
24,913,582 |
23,893,508 |
|
| LONG
TERM CERTIFICATES OF INVESTMENT |
8 |
12,282,344 |
19,226,702 |
|
|
|
|
|
| DEFERRED
LIABILITIES |
|
|
|
| Gratuity |
|
259,991 |
109,800 |
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
|
|
|
| Current
portion of obligations |
|
|
| under
assets subject to lease finance |
|
600,655 |
246,707 |
|
| Current
maturity of long term liabilities |
|
42,068,607 |
40,780,582 |
|
| Short
term finances - secured |
|
9 |
5,000,000 |
4,217,693 |
|
| Short
term certificates of investment |
8 |
4,475,000 |
11,500,000 |
|
| Accrued
and other liabilities |
|
10 |
6,770,458 |
7,840,465 |
|
| Taxation |
|
|
108,255 |
642,307 |
|
| Unclaimed
dividend |
|
|
255,513 |
263,339 |
|
| Proposed
dividend |
|
|
16,000,000 |
- |
|
|
|
|
---------- |
---------- |
|
|
|
|
75,278,488 |
65,491,093 |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
283,466,997 |
249,767,740 |
|
|
|
|
|
========== |
========== |
|
|
| TANGIBLE
FIXED ASSETS |
|
11 |
8,669,673 |
7,488,941 |
|
| NET
INVESTMENT IN LEASES |
|
12 |
152,346,487 |
109,393,223 |
|
| LONG
TERM INVESTMENTS |
|
13 |
18,310,875 |
18,310,875 |
|
| LONG
TERM DEPOSITS AND DEFERRED COST |
14 |
577,155 |
248,910 |
|
|
|
|
| CURRENT
ASSETS |
|
|
|
| Current
portion of net investment in leases |
15 |
71,666,492 |
82,013,071 |
|
| Investment
in quoted shares against |
|
|
| sale
purchase contract |
|
16 |
4,107,022 |
5,239,931 |
|
|
|
|
| Short
term investments |
|
17 |
386,285 |
884,250 |
|
|
|
|
| Advances,
prepayments and |
|
18 |
14,753,820 |
24,531,567 |
|
| other
receivables |
|
|
|
|
|
|
| Cash
and bank balances |
|
|
19 |
12,649,188 |
1,656,972 |
|
|
|
|
---------- |
---------- |
|
|
|
|
103,562,807 |
114,325,791 |
|
|
|
---------- |
---------- |
|
|
|
|
283,466,997 |
249,767,740 |
|
|
|
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these financial statements. |
|
|
|
Chief Executive |
|
Director |
|
|
|
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 1998 |
|
|
|
|
|
|
|
1998 |
1997 |
|
|
Note |
Rupees |
Rupees |
|
| REVENUE |
|
|
|
|
|
|
| Income
from lease operations |
|
48,609,552 |
43,186,416 |
|
| Gain
on sale of securities |
|
1,094,018 |
844,782 |
|
| Other income |
|
|
21 |
2,070,200 |
1,215,679 |
|
|
|
---------- |
---------- |
|
|
|
51,773,770 |
45,246,877 |
|
|
|
|
| EXPENDITURE |
|
|
|
| Financial
and bank charges |
|
22 |
18,486,053 |
18,166,751 |
|
| Administrative
and operating expenses |
23 |
10,459,951 |
9,436,594 |
|
| Provision
for doubtful debts |
|
|
- |
2,641,745 |
|
| Provision
for diminution in investment |
|
497,965 |
- |
|
|
|
|
---------- |
---------- |
|
|
|
|
29,443,969 |
30,245,090 |
|
|
|
|
---------- |
---------- |
|
| PROFIT
BEFORE TAXATION |
|
|
22,329,801 |
15,001,787 |
|
|
|
|
| - Current year |
|
24 |
849,061 |
581,993 |
|
| - Prior
year |
|
686,939 |
3,074,373 |
|
|
|
---------- |
---------- |
|
|
|
1,536,000 |
3,656,366 |
|
|
|
---------- |
---------- |
|
| PROFIT
AFTER TAXATION |
|
20,793,801 |
11,345,421 |
|
| UNAPPROPRIATED
PROFIT BROUGHT FORWARD |
|
366,629 |
290,292 |
|
|
|
|
---------- |
---------- |
|
| PROFIT
AVAILABLE FOR APPROPRIATION |
|
21,160,430 |
11,635,713 |
|
|
|
|
|
| APPROPRIATIONS |
|
|
|
| Transfer
to statutory reserve |
|
4,158,760 |
2,269,084 |
|
| Transfer
to general reserve |
|
- |
9,000,000 |
|
| Transfer
to contingencies reserve |
|
96,523 |
- |
|
| Proposed
dividend @ 20%(1997: NIL) |
|
16,000,000 |
- |
|
|
|
---------- |
---------- |
|
|
|
20,255,283 |
11,269,084 |
|
|
|
---------- |
---------- |
|
| UNAPPROPRIATED
PROFIT CARRIED FORWARD |
|
905,147 |
366,629 |
|
|
|
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these financial statements. |
|
|
|
Chief Executive |
|
|
Director |
|
|
|
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| FOR
THE YEAR ENDED JUNE 30,1998 |
|
|
|
|
1997 |
1998 |
|
|
|
|
Rupees |
Rupees |
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
|
|
| Profit
for the year |
|
22,329,801 |
15,001,787 |
|
| Acid:
Adjustment to reconcile profit to |
|
|
|
| net
cash provided by operating activities |
|
|
|
| Depreciation
and amortization |
|
14,072,251 |
1,469,562 |
|
| Provision
for doubtful debts |
|
- |
2,641,745 |
|
| Provision
for diminution of investment |
|
497,965 |
- |
|
| Provision
for Gratuity |
|
|
|
1,501,911 |
109,800 |
|
|
|
|
|
---------- |
---------- |
|
| Operating
profit before working capital changes |
|
24,385,182 |
19,222,894 |
|
|
|
|
| Decrease/(Increase)
in current assets |
|
10,910,656 |
(12,637,694 |
|
| (Decrease)/Increase
in current liabilities |
|
(7,814,270) |
(26,870,362) |
|
|
|
---------- |
---------- |
|
| Net
cash from operating activities before income tax |
27,481,568 |
(20,285,162) |
|
| Income
tax paid |
|
(2,070,052) |
(3,494,466) |
|
|
|
---------- |
---------- |
|
| Net
cash inflow/(outflow) from operating activities |
25,411,516 |
(23,779,628) |
|
|
|
|
| Cash
flows from investing activities |
|
|
|
|
|
| Investment
in leases - net |
|
(32,606,685) |
25,138,794 |
|
| Long
term investment |
|
- |
(1,000,000) |
|
| Capital
expenditure |
|
(2,587,957) |
(4,017,243) |
|
| Advance
for Capital Expenditure |
|
- |
1,857,000 |
|
|
|
---------- |
---------- |
|
| Net
cash used in investing activities |
|
(35,194,642) |
21,978,551 |
|
|
|
|
|
| Cash
flows from financing activities |
|
|
| Long
term loans |
|
|
|
29,129,114 |
5,700,517 |
|
| Proceeds
from lease obligations |
|
|
23,553,561 |
1,136,202 |
|
| Certificates
of Investment |
|
|
(6,944,358) |
6,560,397 |
|
| Deposits
from lessees |
|
|
|
(3,930,269) |
(1,812,209) |
|
| Long
term deposits and deferred cost |
|
(328,245) |
(118,555) |
|
| Payment
of dividend |
|
|
|
(7,826) |
(13,873,790) |
|
|
|
|
|
---------- |
---------- |
|
| Net
cash (used)/generated from financing activities |
20,273,772 |
(2,407,438) |
|
|
|
|
|
|
|
| Net
increase/(decrease) in cash |
|
|
10,992,216 |
(4,208,513) |
|
| Cash
and bank balances at beginning of the year |
|
1,656,972 |
5,865,485 |
|
|
|
---------- |
---------- |
|
| Cash
and bank balances at the end of the year |
|
12,649,188 |
1,656,972 |
|
|
|
========== |
========== |
|
|
|
Chief Executive |
|
|
Director |
|
|
|
