Capital Asset Leasing Corporation Limited - Annual Reports 2003

CAPITAL ASSETS LEASING CORPORATION LIMITED

ANNUAL REPORT - 2003

CONTENTS

COMPANY INFORMATION

Board of Directors

Mr. Salman Qureshi (Chairman)

Mr. Mohammad Kalim

Mr. I.M. Mohsin

Mr. Anwar Shafi

Mr. Aamir Qureshi

Col (retd.) Abid Saeed Khan

Mr. Jehangir Shah

Audit Committee

Mr. Salman Qureshi (Chairman)

Mr. Aamir Qureshi

Mr. Anwar Shafi

Managing Director & CEO

Mr. Jehangir Shah

Company Secretary

Mr. Shahzad Ismail

Auditors

M/s. Khalid Majid Rahman Sarfaraz Rahim Iqbal Rafiq

Chartered Accountants

Plot No. 180, Block-A,

S.M.C.H.S., Karachi-74400.

Registrars & Share Transfer Office

M/s Corplink (Pvt) Limited

Wings Arcade, 1 -K (Commercial)

Model Town, Lahore.

Tel: 5839182-5887262, Fax: 5869037

Legal Advisors

M/s Mohsin Tayebally & Co., Advocates

Main Bankers

Faysal Bank Limited

National Bank of Pakistan

PICIC Commercial Bank Limited

Registered Office

10/11-B, 3rd Floor, LDA Flats,

Lawrence Road, Lahore.

Tel: 6311604-5, Fax: 6370017

Email: calcorp@nexlinx.net.pk

Principal Branch Office

Hiltop Arcade Suite 4 & 5, Plot # 4-D/II

Gizri Boulevard, Phase IV, DHA, Karachi.

Tel: 5863234 & 5863235 Fax: 5863351

E-mail: calcorp@cyber.net.pk

VISION / MISSION STATEMENTS OF

CAPITAL ASSETS LEASING CORPORATION LIMITED

Vision Statement

To become a leading Leasing services Company by making a sizeable contribution to the

development and growth of the Country's economy, by providing financial and technical

assistance to our customers, combined with innovative ideas and services, thus enabling the

customers and the Company to achieve their objectives.

Mission Statement

To achieve the role of a leading Leasing services Company by delivering quality service at

competitive rates to its customers whilst maintaining the highest levels of professionalism, ethical

standards and corporate individuality, thereby also rewarding the Shareholders, Employees, and

other Stakeholders.

NOTICE OF 11™ ANNUAL GENERAL MEETING

Notice is hereby given that the eleventh (ll'h) Annual General Meeting of the Shareholders of

CAPITAL ASSETS LEASING CORPORATION LIMITED will be held at the Registered

Office of the Company located at 10/11-B, 3rd Floor, LDA Flats, Lawrence Road, Lahore on

Monday, 29th September 2003 11:00 a.m. to transact the following business:-

1. To confirm the minutes of fourth (4th) Extra Ordinary General Meeting of the Shareholers

held on October 25, 2002.

2. To receive, consider and adopt the Audited Accounts of the Company for the year ended

June 30, 2003 together with the Director's and Auditor's Reports thereon.

3. To appoint Auditors of the Comapny and to fix their remuneration. The present Auditors

M/s Khalid, Majid, Rahman, Sarfaraz, Rahim, Iqbal, Rafiq, Chartered Accountants, retire

and being eligible, offer themselves for re-appointment.

4. To review the progress on Paid-up Capital.

5. To transact any other business with the permission of the chair.

By Order of the Board

Lahore Shahzad Ismail

August 30, 2003 Company Secretary

Notes:

1. The Share Transfer Books of the Company will remain closed from 27lh September 2003

to 3rd October 2003 (both days inclusive)

2. A member eligible to attend and vote at this meeting is entitled to appoint another member

as his/her proxy to attend and vote instead of him/her. A proxy must be a member of the

Company. Proxies in order to be effective, must be received at the Registered Office of the

Company not less than 48 hours before the time of holding the meeting.

3. CDC account holders will in addition have to follow the under mentioned guidelines as laid

down in Circular No. 1 dated 26 January 2000 of the Securities and Exchange Commission

of Pakistan for attending the meeting.:

i) In case of individual, the account holders or sub account holders and/or the person whose

securities are in group account and their registration details are unloaded as per the

regulations, shall authenticate his/her identity by showing his/her original National

Identity Card (NIC) or original Passport at the time of attending the meeting. The

shareholders registered on CDS are also requested to bring their Participants ID

numbers and account numbers in CDS.

ii) In case of corporate entity, the Board of Directors resolution/power of attorney with

specimen signature of nominee shall be produced (unless it has been provided earlier) at

the time of meeting.

4. Members are requested to notify any change in their address, to the Company's Share

Registrars M/s Corplink (Pvt.) Ltd., Wings Arcade, 1-K (Commercial) Model Town, Lahore,

immediately.

DIRECTORS' REPORT

The Board of Directors takes pleasure in presenting the 11th Annual Report along with the

Audited Financial Statements for the year ended June 30, 2003:

Financial Results:

2003

2002

Rupees

Gross revenues

38,376,583

32,063,613

Administrative expenses

19,760,546

18,854,645

Financial and other Charges

21,457,951

14,394,796

Provision / (Reversals) for potential losses

-1,594,183

-3,046,926

Operating Profit / (Loss) for the year

-1,247,731

1,861,098

Provision / (Reversals) for taxation

600,000

550,000

Profit / (Loss) after tax

-1,847,731

1,311,098

Un appropriated profits (Brought Forward)

17,521,622

14,397,544

Prior years adjustment

2,990,000

Un-appropriated profits (B/F) Restated

17,521,622

17,387,544

Appropriations :

Transfer to Statutory Reserve

-781,020

Transfer to Deferred Tax Reserve

1,104,428

-396,000

Un-appropriated Profit (Carried Forward)

16,778,319

17,521,622

Review of Operations:

The Balance Sheet size of the Company grew to Rs. 358.892 mln. (2002: Rs. 284.163 mln.)

registering a 26 % increase. The attention of the Management remained centered on Leasing

business and required extra efforts to be made due to the competitive rates environment which

has resulted in substantial decrease of leasing rates in the market. Efforts continued to find new

sources for resource mobilization at low rates to enable the Company to pass-on the benefits to

its lessees. The main focus of financing remained the education sector, which is very viable, and

the Company has had encouraging experience leasing to educational institutions. SME's is

another sector to which lease financing has been extended and in the short period that we have

been financing such businesses, the relationships have been very satisfactory.

The leased-assets portfolio of the Company remains well - diversified, though vehicles, both

private and commercial, are the major part of the portfolio. In the SME's sector machinery &

equipment are the main assets leased-out. The reducing rates in the Market, but in comparison

the slower decline in our borrowing rates, besides other factors, played a role resulting in an

operational loss during the year, and efforts are afoot to convert the loss into profit during the

new financial year. We continued to be on the rating watch list of our rating company and

therefore there has been no change in our Ratings during the period under review.

The paid-up capital of the Company has increased to Rs. 104,431,6807- from

Rs. 77,831,410/- due to the Right Issue of Shares at 30% discount, which were issued in three

tranches beginning October 2002. The discount is to be amortized over a period of 5 years. The

total Shareholders Equity has increased as on June 30, 2003 to Rs. 131,435,185/-. Inspite of the

increase in the Paid-up Capital, the Company has been unable to comply with the requirements of

the Securities & Exchange Commission of Pakistan, which set the minimum amount for Paid-up

Capital at Rs. 200 million. The main reason for this short fall has unfortunately been International

Multi Leasing Corporation (IML), whose Management has refused to cooperate with us for

perfecting the Merger between the two companies as per the undertakings and decisions of the

respective Shareholders; Lahore High Court; main Sponsors and respective Managements of both

Companies. All these formalities were completed as per requirements. The Major Sponsor of

IML has also not honoured his commitments with regard to the Right Shares of the Company

and undertakings he had committed to provide.

IML filed an Application before the Merger sanctioning Bench of the Lahore High Court for

withdrawal of the Merger Orders. The Honourable Judge dismissed the Application and directed

IML to abide by the Merger conditionalities. However IML has now filed an Appeal before a

Division Bench of the Lahore High Court, which is to be heard in September. As a result of these

circumstances the Merger between the two companies is presently not perfected. We are hopeful,

however, for a positive outcome of the hearing, because of our faith and confidence in the

honorable Court, and also our belief that the Merger is in the common interests and benefit of all

the Share holders of both Companies.

Statement in Compliance With Code of Corporate Governance:

With the introduction of the Code of Corporate Governance, stronger controls and transparency

will come into the corporate culture of the Company and we welcome the SECP's initiative in

introducing this Code which will be helpful for the Shareholders, Directors & the Management of

the Company.

The Directors of your Company are pleased to state, in compliance of the best practices under the

Code of Corporate Governance, that:-

1. The annexed financial statements, prepared by the management of your Company,

present fairly its state of affairs, result of its operation, cash flow and changes in its equity.

2. The Company has maintained proper books of accounts.

3. Appropriate accounting policies have been applied in preparation of financial statements

and accounting estimates are based on reasonable and prudent judgment.

4. International Accounting Standards, as applicable in Pakistan, have been followed in

preparation of financial statements & any departure there from has been adequately

disclosed.

5. The system of internal control is sound in design and has been effectively implemented

and monitored. It is being continuously reviewed and weaknesses, if any, will be

removed.

6. There are no significant doubts upon the Company's ability to continue as a going

concern.

7. There has been no material departure from the best practices of Corporate

Governance as detailed in the Listing Regulations.

8. Summary of key operating and financial data of last six years is annexed to this report.

9. The Company has issued 2,660,027 Right Shares at Discount of 30%.

10. During the year under review six meetings of the Board of Directors were held.

Attendance by each director is as follows:-

Name of Director

Number of Meetings

Attended

i) Mr. Salman Qureshi

ii) Mr. Jehangir Shah

iii) Mr. Aamir Qureshi