| Ibrahim Leasing Limited |
|
|
|
|
|
|
|
| Annual
Report 1998 |
|
|
|
| Contents |
|
|
| Company
Information |
|
| Notice
of Meeting |
|
| Directors'
Report |
|
| Auditors'
Report |
|
| Balance
Sheet |
|
| Profit
and Loss Account |
|
| Statement
of Changes in Financial Position |
|
| Notes
to the Accounts |
|
| Pattern
of Shareholding |
|
|
|
| COMPANY
INFORMATION |
|
|
|
|
| Chief
Executive |
Abdul Aziz Khan |
|
|
|
|
| Directors |
|
Sheikh Mukhtar Ahmed |
|
|
|
Sheikh Mohammad Yaseen |
|
|
|
Mr. Mohammad Naeem
Mukhtar |
|
|
|
Mr. Mohammad Waseem
Mukhtar |
|
|
|
Mr. Asim Yaseen |
|
|
|
Mr. Atif Yaseen |
|
|
| Secretary |
|
S.M. Hasnain Rizvi |
|
|
|
|
|
|
| Auditors |
|
M. Yousuf Adil Saleem
& Co. |
|
|
|
Chartered Accountants, |
|
|
|
Lahore. |
|
|
|
|
|
|
|
| Tax
Consultants |
F.R. Merchant & Co. |
|
|
|
Chartered Accountants, |
|
|
|
Karachi. |
|
|
|
| System
Consultants |
KPMG Peat Marwick |
|
|
|
Associates (Pvt) Limited |
|
|
|
Karachi. |
|
|
|
|
| Bankers |
|
Askari Commercial Bank
Limited |
|
|
|
Al-Faysal Investment Bank
Limited |
|
|
|
Al-Baraka Islamic
Investment Bank |
|
|
|
The Bank of Punjab |
|
|
|
| Registered
Office/ |
Ibrahim Centre |
|
| Share
Department |
GK-7/59, Bagh-e-Zehra
Street |
|
|
|
Kharadar |
|
|
|
Karachi. |
|
|
|
|
| Head Office |
|
Ibrahim Centre |
|
|
|
l-A, Ahmed Block |
|
|
|
New Garden Town |
|
|
|
Lahore. |
|
|
|
| NOTICE
OF MEETING |
|
|
| Notice
is hereby given that the 5th Annual General Meeting of the shareholders of
the company will be |
|
| held
on 31-12-1998 at 4.00 P.M. at F-352, S.I.T.E., Karachi to transact the
following business:- |
|
|
| 1.
To confirm the minutes of the preceding meeting of the shareholders of the
company. |
|
|
| 2.
To consider and approve the Annual Audited Accounts for the year ended
30-06-1998. |
|
|
| 3.
To consider and approve the declaration of Cash Dividend @ 10% as recommended
by the Board |
|
| of
Directors. |
|
|
| 4.
To appoint Auditors for the year 1998-99 and to fix their remuneration. The
present auditors |
|
| M/s.
M. Yousuf Adil Saleem & Co. Chartered Accountants, being eligible for
appointment, offer |
|
| themselves
for re-appointment. |
|
|
| 5.
To consider any other matter with the permission of the chair. |
|
|
|
|
By order of the Board |
|
|
|
|
|
|
| Place:
Karachi. |
|
S.M. Hasnain Rizvi |
|
| Date:
November 20, 1998 |
|
Company Secretary |
|
|
| Notes: |
|
|
| i.
The share transfer books of the company shall remain closed from 25-12-1998
to 31-12-1998 |
|
| (both
days inclusive) to determine the names of members entitled to receive
dividend and to |
|
| attend
the meeting. Transfers received in order at the registered office of the
company at Ibrahim |
|
| Centre,
GK-7/59, Bagh-e-Zehra Street, Kharadar, Karachi at the close of business on
24-12-1998 |
|
| will
be treated in time. |
|
|
| ii.
A member entitled to attend and vote at the meeting may appoint another
member as his/her |
|
| proxy
to attend and vote on his/her behalf. |
|
|
| iii.
The proxies in order to be effective must be received at the registered
office of the company |
|
| atleast
48 hours before the time for holding the meeting. |
|
|
|
| Directors'
Report to the Shareholders |
|
|
| We
feel pleasure in presenting the fifth Annual Report of your company together
with audited accounts |
|
| for
the year ended June 30, 1998. |
|
|
| Financial
Results |
|
| Financial
results of your company for the period under review are summarized as
follows: |
|
|
|
|
Rupees |
|
|
| Gross
revenue |
|
41,491,164 |
|
| Expenditure |
|
|
24,644,650 |
|
| Profit
before taxation |
|
16,846,514 |
|
| Provision
for taxation |
|
1,272,826 |
|
| Net
profit after taxation |
|
15,573,688 |
|
| Un-appropriated
profit brought forward |
|
4,210,824 |
|
| Total
profit available for appropriation |
|
19,784,512 |
|
|
| Appropriations: |
|
| Your
Directors are pleased to recommend a cash dividend @ 10% |
|
| i.e.
Rupee 1.00 per share out of profits earned. |
|
|
| Proposed
dividend |
|
10,000,000 |
|
| Special
reserve |
|
3,114,738 |
|
| Un-appropriated
profit carried forward |
|
6,669,774 |
|
|
| During
the period under review the gross revenue of the company amounted to Rs.
41.491 million |
|
| compared
to Rs. 35.015 million for the previous year registering a growth of 18.49%.
The company |
|
| achieved
satisfactory disbursement level compared to the same period last year. The
net investment in |
|
| leases
increased to Rs. 244 million as on June 30, 1998 showing an increase of
24.43% over the year |
|
| 1997.
The management has pursued prudent approach for writing leases for selected
profitable companies |
|
| with
consistency in cash flow generation and satisfactory track record of payments
to financial institutions. |
|
| Besides,
the company continued its policy of small and medium size leases and also
successfully |
|
| enhanced
share of consumer leasing to keep the overall portfolio well diversified.
Asset-wise lease |
|
| portfolio
comprises of 87% plant & machinery, 10% vehicles, 3% equipment as on June
30, 1998. Under |
|
| the
persisting uncertain economic scenario, we are happy to report that the
recovery of lease rentals for |
|
| the
year remained satisfactory. Sector-wise analysis of lease portfolio shows
that the portfolio is well |
|
| diversified. |
|
|
| This
year your company has provided a sum of Rs. 5.00 million for potential lease
losses in addition to |
|
| Rs.
3.115 million to normal statutory reserve maintained to strengthen the
financial position. This resulted |
|
| into
a decrease in the net profit. |
|
|
| The
demand for financing new capital equipment is depressed with the present
economic crises. However, |
|
| we
are confident that as the economy revives, the demand for leasing will
increase, especially in view of |
|
| its
convenience for financing investment schemes. Other favourable factors like
exemption of 3.5% |
|
| withholding
tax on sale and lease back transactions and redressing of the anomaly
regarding treatment |
|
| of
residual value for lessees are expected to generate more business for the
leasing sector. |
|
|
| The
company has already arranged credit lines of Rs. 83 million to finance its
core business of leasing. |
|
| Negotiations
are in progress with other financial institutions for further credit
facilities. Other fund raising |
| instruments
like issuing of Term Finance Certificates (TFCs) and Certificates of
Investment (COIs) will |
|
| be
evaluated to augment its funding resources for future growth. |
|
|
| We
will continue our efforts to grow in the leasing industry following
conservative approach for new |
|
| lease
proposals in order to maintain quality portfolio with diversified risk of
assets and industrial sectors. |
|
|
| The
Millennium Bug |
|
| The
company has assigned the task of year 2000 computer problem to its
consultants and by September |
|
| 1999,
our all applications will be year 2 k compliant. |
|
|
| Auditors |
|
| The
present auditors M/s M. Yousuf Adil Saleem & Co. Chartered Accountants,
being due for retirement, |
|
| have
offered themselves for re-appointment for the year ending June 30, 1999. |
|
|
| Acknowledgment |
|
| We
wish to place on record our thanks to all regulatory authorities, banks and
financial institutions for |
|
| their
support. We would also like to thank all the company personnel for their
dedication and hard work. |
|
|
|
|
On behalf of the Board |
|
|
|
|
|
|
| Place:
Karachi. |
|
Abdul Aziz Khan |
|
| Date:
November 20, 1998 |
|
Chief Executive |
|
|
|
|
|
|
|
| Auditors'
Report to the Members |
|
|
| We
have audited the annexed balance sheet of IBRAHIM 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 purpose of 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, investment 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 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 Company's |
|
| affairs
as at June 30, 1998 and of the profit and the changes in the financial
position for the year |
|
| then
ended; and |
|
|
| d)
Zakat was deductible at source under the Zakat and Ushr Ordinance, 1980 has
been deducted by |
|
| the
Company and deposited in the Central Zakat Fund established under section 7
of that |
|
| Ordinance. |
|
|
|
|
| Place:
Lahore. |
|
M. Yousuf Adil Saleem & Co. |
|
| Date:
November 20, 1998 |
|
Chartered Accountants |
|
|
|
| Balance
Sheet |
|
| as
at June 30, 1998 |
|
|
|
|
1998 |
1997 |
|
|
Note |
Rupees |
Rupees |
|
|
|
|
|
| Capital
and reserves |
|
|
|
| Authorised
capital |
|
|
|
| 10,000,000
ordinary shares of Rs. 10/- each |
|
100,000,000 |
100,000,000 |
|
|
|
|
========== |
========== |
|
| Issued,
subscribed and paid-up capital |
|
| 10,000,000
ordinary shares of Rs. 10/- each |
|
| fully
paid in cash |
|
|
100,000,000 |
100,000,000 |
|
| Special
reserve |
|
3 |
11,667,443 |
8,552,705 |
|
| Unappropriated
profit |
|
|
6,669,774 |
4,210,824 |
|
|
|
|
---------- |
---------- |
|
|
|
|
118,337,217 |
112,763,529 |
|
|
|
|
|
| Redeemable
capital |
|
4 |
10,000,000 |
- |
|
|
|
|
|
|
| Liabilities
against assets |
|
|
|
| subject
to finance lease |
|
5 |
- |
- |
|
| Long
term security deposits |
|
6 |
31,008,049 |
27,310,232 |
|
|
|
|
|
|
| Deferred
liabilities |
|
|
|
|
| Gratuity |
|
|
|
807,762 |
526,523 |
|
|
|
|
|
| Current
liabilities |
|
|
|
|
| Short
term borrowings - secured |
|
7 |
56,603,999 |
52,472,357 |
|
| Current
portion of long term liabilities |
8 |
23,010,774 |
9,915,530 |
|
| Creditors,
accrued and other liabilities |
9 |
14,696,832 |
1,41 7,538 |
|
| Unclaimed
dividend |
|
|
1,820,868 |
1,464,529 |
|
| Provision
for taxation |
|
|
553,921 |
1,449,730 |
|
| Proposed
dividend |
|
|
10,000,000 |
15,000,000 |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
106,686,394 |
81,719,684 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
266,839,422 |
222,319,968 |
|
|
|
|
========== |
========== |
|
|
|
|
| Operating
fixed assets |
|
10 |
955,170 |
943,665 |
|
| Net
investment in lease finance |
|
11 |
162,894,106 |
142,191,124 |
|
| Long
term investments in securities |
|
12 |
21,204,200 |
21,204,200 |
|
| Long
term deposits and deferred costs |
13 |
961,587 |
1,367,977 |
|
|
|
|
|
|
| Current
assets |
|
|
|
|
|
|
|
|
| Short
term investment in securities |
|
14 |
1,500,013 |
- |
|
| Current
portion of net investment |
|
|
|
|
| in
lease finance |
|
|
76,117,402 |
53,916,941 |
|
| Advances,
deposits, prepayments and |
|
|
|
|
| other
receivables |
|
15 |
709,143 |
1,785,555 |
|
| Cash
and bank balances |
|
16 |
2,497,801 |
910,506 |
|
|
|
|
---------- |
---------- |
|
|
|
|
80,824,359 |
56,613,002 |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
266,839,422 |
222,319,968 |
|
|
|
|
|
========== |
========== |
|
| The
annexed notes from 1 to 23 form an integral part of these accounts. |
|
|
|
Chief Executive |
|
Director |
|
|
|
| Profit
and Loss Account |
|
| for
the year ended June 30, 1998 |
|
|
|
|
1998 |
1997 |
|
|
Note |
Rupees |
Rupees |
|
|
|
|
| Revenue |
|
|
|
| Income
from lease operations |
|
17 |
41,359,606 |
34,938,736 |
|
| Profit
on bank deposits and |
|
|
| short
term placements |
|
|
131,558 |
76,668 |
|
|
|
|
---------- |
---------- |
|
|
|
|
41,491,164 |
35,015,404 |
|
|
|
|
| Expenditure |
|
|
|
| Financial
charges |
|
18 |
13,700,778 |
10,538,250 |
|
| Administrative
and operating expenses |
19 |
5,335,882 |
4,568,213 |
|
| Diminution
in value of securities |
|
|
- |
289,100 |
|
| Deferred
cost amortized |
|
|
607,990 |
607,990 |
|
| Provision
for potential lease losses |
|
|
5,000,000 |
- |
|
|
|
|
---------- |
---------- |
|
|
|
|
24,644,650 |
16,003,553 |
|
|
|
|
---------- |
---------- |
|
| Profit
before taxation |
|
|
16,846,514 |
19,011,851 |
|
|
|
|
|
|
| Provision
for taxation |
|
|
|
| For the year |
|
|
553,921 |
307,024 |
|
| Prior year |
|
718,905 |
- |
|
|
|
|
---------- |
---------- |
|
| Net
profit after taxation |
|
15,573,688 |
18,704,827 |
|
| Unappropriated
profit brought forward |
|
4,210,824 |
4,246,962 |
|
|
|
|
---------- |
---------- |
|
| Profit
available for appropriation |
|
19,784,512 |
22,951,789 |
|
|
|
|
| Appropriation |
|
|
| Proposed
dividend @ 10% (1997: @ 15%) |
|
10,000,000 |
15,000,000 |
|
| Transferred
to special reserve |
|
3,114,738 |
3,740,965 |
|
|
|
|
---------- |
---------- |
|
|
|
13,114,738 |
18,740,965 |
|
|
|
---------- |
---------- |
|
| Unappropriated
profit carried forward |
|
6,669,774 |
4,210,824 |
|
|
|
|
========== |
========== |
|
|
| The
annexed notes from 1 to 23 form an integral part of these accounts. |
|
|
|
Chief Executive |
|
Director |
|
|
|
| Statement
of Changes in Financial Position |
|
| (Cash
Flow Statement) for the year ended June 30, 1998 |
|
|
|
|
|
1998 |
1997 |
|
|
|
|
Rupees |
Rupees |
|
|
|
|
| A.
Cash flow from operating activities |
|
|
|
|
|
| Profit
before taxation |
|
16,846,514 |
19,011,851 |
|
|
|
|
| Adjustments
to reconcile profit to net cash |
|
|
| provided
by operating activities |
|
|
|
|
|
|
| Provision
for diminution in value of securities |
|
- |
289,100 |
|
| Provision
for gratuity |
|
320,829 |
228,185 |
|
| Provision
for potential lease losses |
|
5,000,000 |
- |
|
| Amortization
of deferred costs |
|
607,990 |
607,990 |
|
| Financial
charges |
|
13,700,778 |
10,538,250 |
|
| Depreciation |
|
164,150 |
171,197 |
|
| Fixed
assets written off |
|
- |
1,800 |
|
|
|
---------- |
---------- |
|
|
|
|
|
19,793,747 |
11,836,522 |
|
|
|
|
|
---------- |
---------- |
|
| Operating
profit before working capital changes |
|
36,640,261 |
30,848,373 |
|
|
|
|
|
|
|
| Changes
in working capital |
|
|
|
| (Increase)/decrease
in current assets |
|
|
| Advances,
deposits, prepayments & other receivables |
(59,121) |
(61,458) |
|
| Increase/(decrease)
in current liabilities |
|
|
| Creditors,
accrued and other liabilities |
|
11,969,096 |
7,803 |
|
|
|
---------- |
---------- |
|
| Net
(Increase)/decrease in working capital |
|
11,909,975 |
(53,655) |
|
| Gratuity
paid |
|
(39,590) |
(4,708) |
|
| Financial
charges paid |
|
(12,390,580) |
(9,740,373) |
|
| Tax paid |
|
(1,085,922) |
(1,085,175) |
|
|
|
---------- |
---------- |
|
| Net
cash from operating activities |
|
35,034,144 |
19,964,462 |
|
|
|
========== |
========== |
|
|
|
|
|
| B.
Cash flow from investing activities |
|
|
| Increase
in long term deposits |
|
(148,780) |
- |
|
| Investment
in lease - Net |
|
(47,903,443) |
(26,131,816) |
|
| Investments
in securities - Net |
|
(1,500,013) |
(500,000) |
|
| Capital
expenditure |
|
(175,655) |
(49,160) |
|
|
|
---------- |
---------- |
|
| Net
cash used in investing activities |
|
(49,727,891) |
(26,680,976) |
|
|
|
|
|
========== |
========== |
|
|
| C.
Cash flow from financing activities |
|
|
|
|
|
| Long
term security deposits |
|
|
10,041,928 |
6,242,015 |
|
| Redeemable
capital |
|
|
|
20,200,000 |
8,500,000 |
|
| Redemption
of redeemable capital |
|
|
(3,333,332) |
(16,200,000) |
|
| Short
term bank borrowings |
|
|
4,131,642 |
22,728,654 |
|
| Dividend
paid |
|
|
|
(14,643,661) |
(13,535,471) |
|
| Repayment
of lease liability |
|
|
(115,530) |
(178,206) |
|
|
|
|
|
---------- |
---------- |
|
| Net
cash from financing activities |
|
|
16,281,042 |
7,556,992 |
|
|
|
|
|
| Net
increased(decrease) |
|
|
|
| cash
& bank balances (A+B+C) |
|
|
1,587,295 |
840,478 |
|
|
|
|
|
|
| Cash
and bank balances |
|
|
|
|
| at
the beginning of the year |
|
|
910,506 |
70,028 |
|
|
|
|
|
|
| Cash
& bank balances at the |
|
|
---------- |
---------- |
|
| end
of the year |
|
|
|
2,497,801 |
910,506 |
|
|
|
|
|
========== |
========== |
|
|
|
|
| Notes
to the Accounts |
|
| for
the year ended June 30, 1998 |
|
|
| 1.
Status and activities |
|
| The
company was incorporated as a public limited company on July 26, 1993 and is
listed on the |
|
| Stock
Exchanges in Pakistan. |
|
|
| The
company is classified as a non-banking financial institution by the State
Bank of Pakistan |
|
| under
the Banking Companies Ordinance, 1962 and is mainly engaged in the business
of leasing. |
|
|
| 2.
Significant accounting policies |
|
|
| 2.1
Accounting convention |
|
| These
accounts have been prepared on the basis of "Historical Cost
Convention". |
|
|
| 2.2
Staff retirement benefits |
|
| The
company operates an unfunded gratuity scheme covering all its employees.
Provision |
|
| is
made annually to cover the liability under the scheme. |
|
|
| 2.3
Operating fixed assets |
|
|
| Owned |
|
|
| Operating
fixed assets are stated at cost less accumulated depreciation. Depreciation
is |
|
| charged
to income applying the reducing balance method at the rates specified in
operating |
|
| assets
note. Depreciation on additions during the year is charged on the basis of
whole |
|
| year
while no depreciation is charged on deletions during the year. |
|
|
| Leased |
|
| The
company accounts for the assets acquired under finance lease by recording the
assets |
|
| and
related liabilities. Financial charges are allocated to accounting periods in
a manner so |
|
| as
to provide a constant periodic rate of charge on the outstanding liability.
Depreciation is |
|
| charged
at rates specified in the related note, to write off the assets over
estimated useful |
|
| life
in view of the certainty of ownership of the assets at the end of the leave
period. |
|
|
| 2.4
Deferred cost |
|
| This
will be amortized in a maximum period of five years from the year of
deferment. |
|
|
| 2.5
Lease accounting |
|
| All
lease agreements are accounted for in accordance with the International
Accounting |
|
| Standard
17 "Accounting for leases". |
|
|
| 2.6
Investments |
|
|
|
|
| Short term |
|
|
| Investment
in securities are stated at lower of moving average cost and market value on |
|
| overall
portfolio basis. Permanent differences in value are charged to current
income. |
|
|
| Long term |
|
|
| These
are stated at cost. |
|
|
| 2.7
Taxation
~; |
|
| The
charge for current taxation is based on taxable income at the current tax
rate after |
|
| taking
into account tax credit and tax rebates available, if any. Deferred tax is
accounted for |
|
| by
using the liability method on all major timing differences excluding tax
effects on those |
|
| timing
differences which are not likely to reverse in foreseeable future. As measure
of |
|
| prudence
deferred tax debits are not accounted for. |
|
|
| 2.8
Revenue recognition |
|
|
|
|
| Lease
Revenue |
|
| The
company follows the financing method in accounting for and recognition of
lease income. |
|
| Under
this method the earned income i.e. the excess of aggregate lease rental and
estimated |
|
| residual
value over the net investment (cost of leased assets) is deferred and then
amortized |
|
| to
income over the term of the lease, applying the annuity method to produce a
constant |
|
| rate
of return on the net investment in lease. |
|
|
| Musharika
finance |
|
| Income
from Musharika transaction is recognized on the basis of pro-rata accrual of
the |
|
| profit
estimated during the year. |
|
|
| Dividend
income |
|
| Dividend
income is recorded at the time of closure of share transfer books of the
company |
|
